Cost & Management Accounting

Course ID
FC 203
Level
Undergraduate
Program
BBA (FIA)
Semester
Second
Credits
6.0
Paper Type
Core Course
Method
Lecture & Tutorial

Unique Paper Code: 61011202

This paper will acquaint the students with cost and management accounting concepts and its applications for decision making, planning and control.

Learning Outcomes:

At the end of the course, students should be able to:

  • Understand the basis of conventional and contemporary costing systems
  • Determine the costs of products and services
  • Critically analyse relevant costs and provide recommendations for decision making
  • Prepare plans and budgets and analyse variances from standard cost to pinpoint areas that need control

Course Contents

Unit I
Unit II
Unit III
Unit IV

Unit I (3 weeks)

Nature, Scope of Management Accounting: Meaning, definition, nature and scope of Management Accounting; Cost concepts: , Cost Control, and Cost Reduction; Elements of Cost, Components of total Cost, Cost Sheet. Classification of Costs: Fixed, Variable, Semi- variable, and Step Costs; Product, and Period Costs; Direct, and Indirect Costs; Relevant, and Irrelevant Costs; Shut-down, and Sunk Costs; Controllable, and Uncontrollable Costs; Avoidable, and Unavoidable Costs; Imputed / Hypothetical Costs; Out-of-pocket Costs; Opportunity Costs; Expired, and Unexpired Costs; Conversion Cost. Cost Ascertainment: Cost Unit and Cost Center. Overhead allocation, Overhead Apportionment, (Simultaneous Equation, Repeated Distribution methods) and Overhead Absorption.

References:

Arora, M.N. (2016) A Textbook of Cost and Management Accounting. Vikas Publishing House Pvt. Ltd. Chapters1, 2, 5.

Maheshwari, S.N. and Mittal, S.N. (2016) Cost Accounting: Theory and Problems. Shree Mahavir Book Depot Chapters1, 5.

Unit II ( 3 weeks)

Cost-Volume-Profit Analysis: Marginal cost, Contribution per unit and Total contribution. Profit- Volume Ratio, Break-even Analysis : Cost Break-even Point, Composite Break-even Point, Cash Break-even Point, Margin of safety. Relevant Costs and Decision Making such as : Key Factor, Pricing, Product Profitability, Dropping a product line, Make or Buy, Export Order, Sell or Process Further, Shut down vs. Continue  operations.

References:

Arora, M.N. (2016) A Textbook of Cost and Management Accounting. Vikas Publishing House Pvt. Ltd. Chapters10, 11.
Maheshwari, S.N. and Mittal, S.N. (2016) Cost Accounting: Theory and Problems. Shree Mahavir Book Depot Chapter 16.

Unit III (3 weeks)

Budgets and Budgetary Control: Meaning, Types of Budgets, Steps in Budgetary Control, Fixed and Flexible Budgeting, Sales budget, Production Budget, Raw material consumption Budget, Raw Material Purchase Budget, Overhead Budgets, Cash Budget, and Master Budget. Zero based budgeting. Standard Costing and Variance Analysis: Meaning of Standard Cost and Standard Costing, Advantages, Limitations and Applications; Material Cost Variance, Price and Usage Variance and Mix and yield Variance; Labor Cost Variance, Rate and Usage Variance, Idle time, Mix and Yield variance.

References:

Arora, M.N. (2016) A Textbook of Cost and Management Accounting. Vikas Publishing House Pvt. Ltd. Chapters12, 13.

Maheshwari, S.N. and Mittal, S.N. (2016) Cost Accounting: Theory and Problems. Shree Mahavir Book Depot Chapters 14, 15.

Unit IV (3 weeks)

Process costing, concepts of normal loss, abnormal loss, abnormal effectiveness. Preparation of process accounts, normal loss account, abnormal loss account, abnormal gain account. Process costing with opening and closing WIP; equivalent units (using FIFO) and Cost allocation. Joint and by products : Allocation of joint costs based on Physical units method, Relative market value methods (Sales value at split off method and Net realisable value method). Introduction to the concept of Target Costing, Life Cycle Costing, Quality Costing, andActivity based Costing.

References:

Arora, M.N. (2016) A Textbook of Cost and Management Accounting. Vikas Publishing House Pvt. Ltd.7 Chapters 8, 18.

Maheshwari, S.N. and Mittal, S.N. (2016) Cost Accounting: Theory and Problems. Shree Mahavir Book Depot Chapters 9,21, 22, 23

Additional Information

Text Books


Arora, M.N. (2016) A Textbook of Cost and Management Accounting. Vikas Publishing House Pvt. Ltd.
Maheshwari, S.N. and Mittal, S.N. (2016) Cost Accounting: Theory and Problems. Shree Mahavir Book Depot

Additional Readings


Datar,S.M. & Rajan,M.V. (2017) Horngren’s Cost Accounting: A Managerial Emphasis. Pearson.
Note: Latest edition of the readings may be used.

Teaching Learning Process

Lectures, problems and numerical, team paper, presentations, case studies

Assessment Methods

• Internal Assessment 25 marks
• Written Theory Exam 75 marks

Keywords

Activity based costing, Budgetary control, Cost Reduction, Cost Variance, Life cycle costing, Management Accounting

Disclaimer: Details on this page are subject to change as per University of Delhi guidelines. For latest update in this regard please refer to the University of Delhi website here.

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