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COST ACCOUNTING 1

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COST ACCOUNTING 1

The purpose of this course is to introduce you to the concepts and procedures of estimating cost of producing products or rendering services, allocating the costs over units of products and controlling the costs after setting the standards. The course also concentrates on, how the cost accounting information is generated and how that information is to be used under different managerial situations. Cost accounting courses typically cover two primary issues; (1) cost accumulation and determination and (2) cost controlling. We will cover each in this course; however the majority of our time will be spent on accumulation and determination of cost.

ACN 202 (Management Accounting)

  1. It is the student’s responsibility to gather information about the assignments and covered topics during the lectures missed. Regular class attendance is mandatory. Points will be taken off for missing classes. Without 70% of attendance, sitting for final exam is NOT allowed. According to IUB system students must enter the classroom within the first 20 minutes to get the attendance submitted.
  2. The date and syllabus of quiz, midterm and final exam is already given here, however, announcements will be given ahead of time. There is NO provision for make-up quizzes.
  3. The reading materials for each class will be given prior to that class so that student may have a cursory look into the materials.
  4. Class participation is vital for better understanding of sociological issues. Students are invited to raise questions.
  5. Students should take tutorials with the instructor during the office hours. Prior appointment is required.
  6. Students must maintain the IUB code of conduct and ethical guidelines offered by the School of Business.
  7. Students must refrain from any type of cheating and/or plagiarism in a course. Any student acting otherwise will receive an “F” grade in the course. School of Business, IUB, maintains a zero tolerance policy regarding violation of academic integrity.
  1. Students are not allowed to keep bags, handouts, books, mobile phones, smart watches or any other smart electronic devices with them during any exam. Students are advised to keep everything in the front of the class room before the exam starts. Please note that, just carrying any smart electronic devises (even if the devise is turned off or put it in silent mode) during the exam will be considered as “cheating”. Moreover, during the exam, anything written on hand palms (or anywhere else) and carrying paper materials (whatever is written) will be considered as “cheating”. Any sorts of “cheating” will result in an “F” grade with no exception. During the exam, students are only allowed to carry pen, pencil, eraser, sharpener, ruler, highlighter and calculator in a clear plastic bag.
Type of Evaluation Nos. Weight
Class Attendance and Participation 100% 5
Quiz (Best two will be counted) 5 15
Project and Presentation 01 10
Midterm Exam 01 30
Final Exam 01 40
Total   100%

The following chart will be followed for grading. This has customized form the guideline provided by the school of Business.

A A- B+ B B- C+ C C- D+ D F
90-100 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 0-44

* Numbers are inclusive

The course will be based mostly on the following books [some other books and journals may be referred time to time]:

  • Horngren, Dattar and Foster, “Cost Accounting: A Managerial Emphasis,” 15th edition, Prentice-Hill Pearson

 

Link to virtual learning system: http://103.254.86.4/sb/ (School of Business – Faculty name- Login as a guest- password is 1234).

Sessions Topic Learning Outcomes Readings
Session -1 Introduction Introduction to Cost Accounting, Explanation of Course Outline Course Outline
Session -2 The Manager and Management Accounting Distinguish financial accounting from management accounting Understand how management accountants help firms make strategic decisions Describe the set of business functions in the value chain and identify the dimensions of performance that customers are expecting of companies

 

Horngren, Chapter1

 

Pages 24-39

 

Handout available on virtual learning system

Session -3 The Manager and Management Accounting Explain the five-step decision-making process and its role in management accounting Describe three guidelines management accountants follow in supporting managers Understand how management accounting fits into an organization’s structure

Understand what professional ethics mean to management accountants

 

Horngren, Chapter 1

 

Pages 24-39

 

Handout available on virtual learning system

Session -4 Cost Terms, Concepts, Purpose, and Behavior Define and illustrate a cost object

Distinguish between direct costs and indirect costs Explain variable costs and fixed costs

Interpret unit costs cautiously

Horngren, Chapter 2

 

Pages 50-87

 

Handout available on virtual learning system

Session -5 Cost Terms, Concepts, Purpose, and Behavior Distinguish inventoriable costs period costs

Illustrate the flow of inventoriable and period costs Explain why product costs are computed in different ways for different purposes Describe a framework for cost accounting and cost management

Relevant Problem Solving from Text

Horngren, Chapter 2

 

Pages 50-87

 

Handout available on virtual learning system

Session -6 Cost-Volume-Profit (CVP) Analysis Explain the features of cost-volume-profit (CVP) analysis Determine the breakeven point and output level needed to achieve a target operating income Understand how income taxes affect CVP analysis Explain how managers use CVP analysis to make decisions

 

Relevant Problem Solving from Text

Horngren, Chapter 3

 

Pages 88-127

 

Handout available on virtual learning system

Session-7 Cost-Volume-Profit (CVP) Analysis

 

 

 

 

 

 

 

 

 

Quiz 1

Explain how sensitivity analysis helps managers cope with uncertainty

Use CVP analysis to plan variable and fixed costs Apply CVP analysis to a company producing multiple products Apply CVP analysis in service and not-for-profit organizations Distinguish contribution margin from gross margin

Relevant Problem Solving from Text

 

Knowledge of CVP Analysis

Horngren, Chapter 3

 

Pages 88-127

 

Handout available on virtual learning system

Session -8 Job Order Costing Describe the building-blocks concepts of costing systems Distinguish job costing from process costing Describe the approaches to evaluating and implementing job-costing systems Outline the seven-step approach to normal costing

 

Relevant Problem Solving from Text

Horngren, Chapter 4

 

Pages 128-171

 

Handout available on virtual learning system

Session -9 Job Order Costing

 

 

 

 

 

 

Quiz 2

Distinguish actual costing from normal costing Track the flow of costs in a job-costing system Dispose of under- or over-allocated manufacturing overhead costs at the end of the fiscal year using alternative methods

Understand variations from normal costing

 

Relevant Problem Solving from Text

 

Knowledge of Job Costing

Horngren, Chapter 4

 

Pages 128-171

 

Handout available on virtual learning system

Session -10 Activity Based Costing (ABC) and Activity Based Management Explain how broad averaging undercosts and overcosts products or services Present three guidelines for refining a costing system

Distinguish between simple and activity-based costing systems Describe a four-part cost hierarchy

 

Relevant Problem Solving from Text

Horngren, Chapter 5

 

Pages 172-217

 

Handout available on virtual learning system

Session -11 Activity Based Costing (ABC) and Activity Based Management

 

 

 

 

 

 

Project

Evaluate the costs and benefits of implementing activity-based costing systems Explain how managers use activity-based costing systems in activity-based management Compare activity-based costing systems and department costing systems

 

Relevant Problem Solving from Text

 

Distribution and explanation of Term Case

Horngren, Chapter 5

 

Pages 172-217

 

Handout available on virtual learning system

 

Case Handout and Questions

Session -12 Standard Costing and Variance Analysis Issue

 

 

 

 

 

 

 

Quiz 3

Understand static budgets and static-budget variances Examine the concept of a flexible budget and learn how to develop it Calculate flexible-budget variances and sales-volume variances Explain why standard costs are often used in variance analysis

 

Relevant Problem Solving from Text

 

Knowledge of ABC Costing

Horngren, Chapter 7

 

Pages 270-309

 

Handout available on virtual learning system

Session -13 Standard Costing and Variance Analysis Issue Compute price variances and efficiency variances for direct-cost categories.

Understand how managers use variances

Describe benchmarking and explain its role in cost management

 

Relevant Problem Solving from Text

Horngren, Chapter 7

 

Pages 270-309

 

Handout available on virtual learning system

Session -14 Review for Midterm  CHAPTERS 1-5 Horngren, Chapter 1-5
Session -15 Midterm Exam  CHAPTERS 1-5 Horngren, Chapter 1-5
Session -16 Allocation of Support Department Cost Discuss why a company’s revenues and costs differ across customers Identify the importance of customer-profitability profiles

Understand the cost-hierarchy-based operating income statement

 

Relevant Problem Solving from Text

 

Horngren, Chapter 14

 

Pages 572-613

 

Handout available on virtual learning system

 

Session -17 Allocation of Support Department Cost Understand criteria to guide cost-allocation decisions Discuss decisions faced when collecting and allocating indirect costs to customers

 

Relevant Problem Solving from Text

 

Horngren, Chapter 14

 

Pages 572-613

 

Handout available on virtual learning system

Session -18 Allocation of Support Department Cost Subdivide the sales-volume variance into the sales-mix variance and the sales-quantity variance and the sales-quantity variance into the market-share variance and the market-size variance

 

Relevant Problem Solving from Text

 

Horngren, Chapter 14

 

Pages 572-613

 

Handout available on virtual learning system

Session -19 Cost allocation – Joint Products and Byproducts Identify the split-off point in a joint-cost situation and distinguish joint products from byproducts Explain why joint costs are allocated to individual products

Allocate joint costs using four methods

 

Relevant Problem Solving from Text

Horngren, Chapter 16

 

Pages 654-687

 

Handout available on virtual learning system

Session -20 Cost allocation – Joint Products and Byproducts

 

 

 

 

 

 

 

 

Identify situations where the sales value at split off method is preferred when allocating joint costs Explain why joint costs are irrelevant in a sell-or-process further decision Account for byproducts using two methods

 

Relevant Problem Solving from Text

Horngren, Chapter 16

 

Pages 654-687

 

Handout available on virtual learning system

 

Session -21 Process Costing

 

 

 

 

 

 

 

 

 

 

 

Quiz 4

Identify the situation in which process-costing systems are appropriate

Understand the basic concepts of process-costing and compute average unit costs

Describe the five steps in process costing and calculate equivalent units

 

Relevant Problem Solving from Text

 

 

Knowkedge of Departmental Costing, Cost Allocation Joint Products and BY Products

Horngren, Chapter 17

 

Pages 686-727

 

Handout available on virtual learning system

Session -22 Process Costing Use the weighted-average method and first-in, first-out (FIFO) method of process costing

 

Relevant Problem Solving from Text

 

Horngren, Chapter 17

 

Pages 686-727

 

Handout available on virtual learning system

Session -23  Process Costing Apply process-costing methods to situations with transferred-in costs

Understand the need for hybrid-costing systems such as operation-costing

 

Relevant Problem Solving from Text

 

Horngren, Chapter 17

 

Pages 686-727

 

Handout available on virtual learning system

Session -24 Inventory Management Identify six categories of costs associated with goods for sale Balance ordering costs with carrying costs using the economic-order-quantity (EOQ) decision model Identify the effect of errors that can arise when using the EOQ decision model and ways to reduce conflicts between the EOQ model and models used for performance evaluation

 

Relevant Problem Solving from Text

Horngren, Chapter 20

 

Pages 786-823

 

Handout available on virtual learning system

Session -25 Inventory Management

 

 

 

 

 

 

 

 

Quiz 5

Describe why companies are using just-in-time (JIT) purchasing Distinguish materials requirements planning (MRP) systems from just-in-time (JIT) systems for manufacturing

Identify the features and benefits of a just-in-time production system

 

Relevant Problem Solving from Text

 

 

Knowledge of Process Costing

Horngren, Chapter 20

 

Pages 786-823

 

Handout available on virtual learning system

Session -26  Project Presentation Case Presentation
Session -27  Project Presentation Case Presentation
Session -28  Project Presentation Case Presentation
Session -29 Final Exam Chapter 7,14,16,17 and 20 Horngren, Chapter 7,14,16,17 and 20
Session 30 Final Exam Chapter 7,14,16,17 and 20 Horngren, Chapter 7,14,16,17 and 20

Students who are willing to audit the course are welcome during the first two classes and are advised to contact the instructor after that.

Plagiarism- that is the presentation of another person’s thoughts or words as though they were the students’ own – must be strictly avoided. Cheating and plagiarism on exam and assignment are unacceptable.

Please see the green book for further information about academic regulation and policies, including withdrawal and grading, apples and penalties for pilgrims and academic misconduct.

Students with disabilities are required to inform the School of Business/ Department of Economics of any specific requirement for classes or examination as soon as possible.