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CA (Inter) Cost Management Acc

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CA (Inter) Cost Management Acc is a very interesting subject. Although you do not have any costing background, You have studied this subject every day of your life since you purchased your first toffee with your parents. The knowledge covers everyday life to the most massive industry in this world.

This paper has almost 70% practicals and 30% theory but still depends on the choice you make. These classes explain various concepts in unique ways.  You need to study each video carefully, make your notes simultaneously. These classes will first explain to you the concepts for which you must make notes, a huge variety of questions to be solved in your notebook with Me and Quiz to be solved at the end of every lecture.

You are also provided with an E-book where you will find a lot of questions for self-practice and what more, you also have e-notes of all the lectures which you can download at any time. Wow, that’s so wonderful.

It has been seen that the student who has a proper time schedule for attending the classes, is regular in their homework and gives all the tests regularly, surely gets excellent marks.

Your classes will give PTR (Point To Remember) which will become a backbone for your revision and conceptual clarity. So let’s start the classes now….

PAPER – 3: COST AND MANAGEMENT ACCOUNTING (One Paper- T hree hours- 100 Marks) Objectives:

  1. (a)  T o develop an understanding of the basic concepts and applications to establish the cost associated with the production of products and provision of services and apply the same to determine prices.
  2. (b)  T o develop an understanding of cost accounting statements.
  3. (c)  T o acquire the ability to apply information for cost ascertainment, planning, control and decision making.

Contents: 1. Overview of Cost and Management Accounting

  1. (i)  Introduction to Cost and Management Accounting
    1. a)  Objectives and Scope of Cost and Management Accounting,
    2. b)  The users of Cost and Management accounting information, Functions of management accounting.
    3. c)  Role of cost accounting department in an organisation and its relation with other departments.
    4. d)  Installation of Costing System
    5. e)  Relationship of Cost Accounting, Financial Accounting, Management Accounting and Financial Management.
    6. f)  Cost terms and Concepts
    7. g)  Cost Reduction and Cost Control
    8. h)  Elements of Costs
    9. i)  Cost behavior pattern, Separating the components of fixed, variable, semi- variable and step costs.
    10. j)  Methods of Costing, T echniques of Costing.
    11. k)  Cost Accounting with use of Information T echnology.
  2. (ii)  Elements of Cost and preparation of Cost Sheets

a) Functional classification and ascertainment of cost

b) Preparation of Cost Sheets for Manufacturing sector and for Service sector 2. Ascertainment of Cost and Cost Accounting System

  1. (i)  Material Cost
    1. a)  Procurement procedures- Store procedures and documentation in respect of receipts and issue of stock, Stock verification,
    2. b)  Valuation of material receipts,
    3. c)  Inventory control- -  T echniques of fixing level of stocks- minimum, maximum, re-order point, safety stock, determination of optimum stock level, -  Determination of Optimum Order quantity- Economic Order Quantity (EOQ), -  Techniques of Inventory control- ABC Analysis, Fast, Slow moving and Non moving (FSN), High, Medium, Low (HML), Vital, Essential, Desirable (VED), Just-in-Time (JIT)- Stock taking and perpetual inventory system, use of control ratios,
    4. d)  Inventory Accounting
  2. (ii)  Employee Cost

a) Attendance and Payroll procedures- - Elements of wages- Basic pay, Dearness Allowance, Overtime, Bonus, Holiday and leave wages, Allowances and perquisites.

  1. b)  Employee Cost Control
  2. c)  Employee Turnover- Methods of calculating employee turnover, causes of employee turnover, effects of employee turnover.
  3. d)  Utilisation of Human Resource, Direct and indirect employee Cost, charging of employee cost, Identifying employee hours with work orders or batches or capital jobs.
  4. e)  Remuneration systems and incentive schemes- Premium Bonus Method (Halsey Plan and Rowan Plan)

(iii) Overheads

  1. a)  Functional analysis- Factory, Administration, Selling, Distribution, Research and Development.
  2. b)  Behavioral analysis- Fixed, Variable and Semi- Variable.
  3. c)  Allocation and Apportionment of overheads using Absorption Costing Method.
  1. d)  Factory Overheads- Primary and secondary distribution,
  2. e)  Administration Overheads- Method of allocation to cost centres or products,
  3. f)  Selling & Distribution Overheads- Analysis and absorption of the expenses in products/ customers, impact of marketing strategies, cost effectiveness of various methods of sales promotion.
  4. g)  TreatmentofResearchanddevelopmentcostincostaccounting.
  1. (iv)  Concepts of Activity Based Costing (ABC)
  2. (v)  Recording and Accounting of Costs
    1. a)  Non-integrated Cost Accounting system- Ledger under non-integral system
    2. b)  Integrated (Cost and Financial) Accounting system- Ledgers under integral s ys t e m .
    3. c)  Difference between the Non- integrated and Integrated Accounting system.
    4. d)  Reconciliation of profit as per Cost and Financial Accounts (under Non- Integrated Accounting System).

3. Methods of Costing

  1. (i)  Single Output/ Unit Costing
  2. (ii)  Job Costing: Job cost cards and databases, collecting direct costs of each job, attributing overheads to jobs, Application of job costing.

(iii) Batch Costing: Determination of optimum batch quantity, Ascertainment of cost for a batch, Preparation of batch cost sheet, Treatment of spoiled and defective work.

  1. (iv)  Contract Costing
    1. a)  Ascertainment of cost of a contract, Progress payment, Retention money, Escalation clause, Cost plus contract, Value of work certified, Cost of Work not certified.
    2. b)  Determination Value of work certified, Cost of work not certified, Notional or Estimated profit from a contact.
  2. (v)  Process/ Operation Costing
    1. a)  Process cost recording, Process loss, Abnormal gains and losses, Equivalent units of production, Inter-process profit, Valuation of work in process.
    2. b)  Joint Products- Apportionment of joint costs, Methods of apportioning joint cost over joint products,
c) By-Products- Methods of apportioning joint costs over by-products, treatment of By-product cost. (vi) Costing of Service Sectors a) Determination of Costs and Prices of services. 4. Cost Control and Analysis (i) Standard Costing

  1. a)  Setting up of Standards, Types of Standards, Standard Costing as method of performance measurement.
  2. b)  Calculation and Reconciliation of Cost Variances-

- Material Cost Variance, employee Cost Variance, Variable Overheads Variance and Fixed Overhead Variance.

  1. (ii)  Marginal Costing
    1. a)  Basic concepts of marginal costing, Contribution margin, Break-even analysis, Break –even and profit volume charts, Contribution to sales ratio, Margin of Safety, Angle of Incidence, Cost-Volume-Profit Analysis (CVP), Multi- product break- even analysis, Consideration of Limiting factor (key factor),
    2. b)  Determination of Cost of a product/ service under marginal costing method, determination of cost of finished goods, work-in-progress,
    3. c)  Comparison of Marginal costing with absorption costing method- Reconciliation of profit under the both methods,
    4. d)  Short term decision making using the above concepts (basic / fundamental level).
  2. (iii)  Budget and Budgetary Control
    1. a)  Meaning of Budget, Essentials of Budget, Budget Manual, Budget setting process, Preparation of Budget and monitoring procedures.
    2. b)  Theuse of budget in planning and control
    3. c)  Flexible budget, Preparation of Functional budget for operating and non- operating functions, Cash budget, Master budget,
    4. d)  Introduction to Principal/ Key budget factor, Zero Based Budgeting (ZBB), Performance budget, Control ratios and Budget variances.

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