INTERNATIONAL ISLAMIC UNIVERSITY, ISLAMABAD FACULTY OF MANAGEMENT SCIENCES
(Department of Accounting & Finance)
TITLE OF DEGREE PROGRAM : BBA Program
DEFINATION OF CREDIT HOURS : 3
DEGREE PLAN: Compulsory
PREREQUISITES: Principles of Accounting (ACT-201)
COURSE OFFERED: Semester 3
COURSE TTLE: Cost Accounting (ACT 301)
Course Objectives and Outcomes:
1. To provide the students with an appropriate knowledge of Cost Accounting 2. To apply cost methods and techniques for preparing and presenting
information for decision-making and cost control, and 3. To prepare standard costs and variances
4. To understand cost concepts, objectives, scope, cost flow and classification 5. To prepare cost of production report and cost statement under process cost
accounting system and job order costing system, respectively
6. To understand and explain material, labor, factory overhead costing and control
7. To calculate and interpret material, labor, overheads variances.
How Program Content Meets The Program Objectives?
Cost information are one of the most important input to good decision making. Understanding of different cost concepts, cost elements, cost flow and cost accumulation enables the students to base their decisions on objective information.
Text Books:
ESSENTIAL TEXT:
Lectures:
The medium of instruction will be English. Instructional methods will vary with each instructor. However, some suggested techniques are
• Quizzes and other tests with feedback and discussions; • Problem Solving
• Lectures and class discussions; • Power Point Presentations; • Guests Speaker;
• Group Activities;
• Oral reports and other student presentations; • Web based assignments and activities
General Rules and Procedures
1. Students unable to submit an assignment on the due date should discuss the matter in advance with the professor. At the professor’s discretion, late assignments may not be accepted. Where late assignments are accepted, the professor will apply a late penalty.
2. Test dates and assignment due dates are announced in class. Students are responsible for keeping track of these dates. There will be no makeup quiz, mid-term or final for any reason whatsoever.
3. Success in this course is based heavily on in-class participation and assignments, therefore; attendance and active in-class participation is essential to a student’s success. All in-class assignments must be completed in-class; they cannot be made up with a take-home. Failure to attend these classes will therefore result in zero in that particular assignment.
Course Assessment Midterm exam 20% Assignments, Projects 20% Quizzes 10% Final 50% Topics Covered
1. Concepts and Scope of Cost Accounting
2. Financial Statements: The Bases for Planning and Control 3. The Cost Accounting Systems: Design and Operation 4. Job Order Costing
5. Process Costing: Cost of Production Report; Lost Unit Calculations, Addition of Materials; Average and FIFO Costing
7. Material Costing and Control 8. Labor Costing and Control
9. Absorption Costing and Variable Costing 10. Standard Costing
11. Marginal Costing and Break-even Analysis 12. Budgeting: Profits, Sales, Costs and Expenses
Week Topics Suggested Reading
Week
1 Concepts and Scope of Cost AccountingDefinition and concept of cost, Cost object, Cost elements, Sources and uses of cost data, Cost accounting v/s financial accounting, Costing department and its relationship with other departments, Role of cost accounting in a
management information system, Uses of cost data.
Chapter 1
Week 2
Financial Statements: The Bases for Planning and Control
The Reporting Function, Financial Statement in the Annual Report, The Flow of Costs, General and Cost Accounting Principles and Practices
Chapter 2
Week
3 Cost Classification and FlowsDirect and indirect cost, Product and period cost, Controllable and uncontrollable cost, Fixed and variable cost, Semi-variable and step fixed cost Cost flow, Statement of cost of goods manufactured and sold.
Chapter 3
Week
4 The Cost Accounting Systems: Design and Operation
Fundamentals of a Cost Accounting Information System, Chart of Accounts, Data Processing by Means of the Journal Voucher, Control System, The Manufacturing Cost Accounting Cycle, The Factory Ledger
Chapter 4
Week
5 Job Order CostingCost Systems: Actual or Standard, Cost Accumulation, Procedures: Job order of Process, Job Order Cost Accumulation Procedures, Practice Questions
Week
6 Process Costing: Cost of Production Report; Lost Unit Calculations
Characteristics and Procedures of Process Costing, Costing by Departments, Product Flow, Procedures for materials, Labor and Factory Overhead Costs The Cost of Production Report
Chapter 6
Week 7
Process Costing: Addition of Materials; Average and FIFO Costing
Increase in Unit Cost due to Addition of Materials, Increase in Unit Cost and Change in Unit Cost due to Addition of Materials, Beginning Work in Process Inventories, Difficulties Encountered in Process Cost Accounting Procedures
Chapter 6
Week 9
Factory Overhead Costing and Control
Classification and collection of overhead, Predetermined overhead applied rate, Factory overhead cost: planned
applied and actual, over and under applied factory overhead and its disposal, Departmentalization of overhead, Allocation, apportionment and reapportionment of overhead costs, repeated distribution and algebraic method for reciprocal, service department costs.
Chapter 6
Week
10 Material Costing and Control
Procedure of material procurement, Two-bin system, The use of FIFO, LIFO and weighted average for material valuation and the pricing for material issue, Stock taking and perpetual inventory, Treatment of differences between physical and book stock, Economic order quantity, Effect of quantity discount on EOQ, Reorder level, safety stock and maximum stock, ABC Control
Chapter 7
Week
11 Labor Costing and ControlDirect and indirect labor, Productivity and
efficiency, Remuneration methods, Straight piece rate and differential piece rate, Incentive wage plan, Group bonus, Time sheet and job cards, Overtime and idle time, Payroll, Labor turnover rate.
Chapter 8
Week
Practice questions
Week 13
Standard Costing
Preparation of standard cost, Material price and usage variances, Labor rate and efficiency variances, Variable overhead expenditure and efficiency variances, Fixed overhead budget and volume variances.
Chapter 10
Week
14 Marginal Costing and Break-even AnalysisMarginal cost and contribution margin, Contribution margin to sales ratio (C/S ratio), Break-even in units and value, Margin of safety ratio (M/S ratio), Break-even graph
Chapter 11
Week
15 Budgeting: Profits, Sales, Costs and ExpensesProfit Planning, Principle of Budgeting, The
complete periodic Budget Chapter 12
Week 16