Iqra University

Karachi

Cost Accounting
Section code:

Course Study Guide

Academic Year 2017

Faculty of Management Science

 Cost Accounting

1. INTRODUCTION
To provide the students with a detailed knowledge of Cost Accounting, to enable them to:
 use the present and traditional approaches of cost accounting in different contexts, and
 apply the cost and management accounting techniques, and evaluate the desired results in
the light of the outcomes

Course Facilitator:
Muhammad Nadeem Khan khan.n@iuk.edu.pk
(Assistant Professor) Extension: 3709

RECOMMENDED TEXT BOOKS

 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed. & 14th Ed.)
 Colin Drury, Management and Cost Accounting (6th edition), Cengage Learning
 Horngren, C.T., Datar, S.M. & Rajan, M., Cost Accounting, (14th Ed.)

2 . ASSESSMENT

While the course is taught using predominantly a classroom lecture/discussion format, group
learning activities are strongly encouraged. Students are expected to ask for assistance through
Office hours, Students are expected to take an active part in the learning process through
participation in classroom/group discussion. Students will be expected to enhance the knowledge
learned in the text by further reading, solving practical problems in forms of exercises and by
analyzing actual corporate annual reports. Assignments, quizzes, exams and the final project relate
the knowledge of Cost accounting principles and concepts to problem solving.
WEIGHTING SCALE:

Component Percent of Total

Final 50%
Midterm 30%
Quizzes 10%
Assignments/Report 10%
Total 100%

ASSIGNMENT POLICY:

Students unable to submit an assignment by the due date should discuss the matter in advance with
the teacher. At the teacher’s discretion, late assignments may not be accepted.

Quizzes:

Total 4 quizzes will be taken and best 3 will be selected mean (N-1) Policy, but all unannounced.

Project: Students are required to submit their project in the last class (that is, the class before the
final exam). Students are allowed to work as a group (4 Members). DO NOT plagiarize. I want
original work. Your 5 minute self explanatory presentations should be in PowerPoint. However, you
will be required to present. Your project documentation must be at least 16 pages (12 Times New
 Cost Accounting

Roman, 1.5 spacing, reference pages, table of contents, titles, sub-titles, etc). You will submit your
project report hard copy and soft copy of your slide presentation and project report

Guest Speaker Session: A 2.5/3.0 -hour guest speaker session on any other current issue of the Cost
Accounting, will be arranged before the FINAL TERM examination. This is a compulsory session
for all the students of this module because final examination will include questions from these
topics.

3. EVALUATION PRINCIPAL AND PRACTICE

Exams consist of a combination of multiple choice questions, short answer questions, problems
requiring calculations, and other types of questions similar to examples demonstrated and discussed
in class, illustrated in the textbook or gleaned through assigned study and learning activities. Exams
will cover material in the textbook as well as discussions, lectures and demonstrations from class.

4. STUDYING PRINCIPLES AND PRACTICE

The methodology for this course encompasses assigned readings, lectures, discussion, and problem
solving. Cost Accounting is an applied field and is difficult to understand without practicing the
applications. Therefore, students are expected to bring the assigned text and a calculator to each
class. Students are also expected to read the relevant chapter and to attempt to solve practice
problems prior to each class. Lectures will be used to highlight key concepts. Example problems
will be solved and discussed in class to apply these concepts, and you will have many opportunities
to self-quiz your mastery of the material. It should be noted that your active ongoing participation in
class and diligent preparation of the practice problems are crucial to effective learning of the
material and to the development of effective problem-solving skills in this field.
To get the most out of classes you will need to do preparatory readings. This may include a handout,
scholarly journal articles, and research papers. You should endeavor to learn also from ‘further
readings’. In regular lecture sessions, you will be expected to take part in discussions, presentations,
etc.
 Cost Accounting

Course Outline

Week Topic Suggested

Readings/Activities

Financial Statements: The Basis for Planning and Control

1.  The Reporting Function Chapter 2
 Financial statement Analysis
 The flow of Cost
 Planning & Control Models, Cost and Profit Analysis

Exercises, Problems &Cases

2. Chapter 2

Costs: Concepts, Uses and Classification, and 1st quiz

3.  The Concept “Cost” Chapter 3
 Classification of Cost
 Uses of Cost data
 Cost Data: Importance of Past, Present and future

The Cost Accounting System: Design and Operation

4.  Fundamental of Cost Accounting Information System Chapter 4
 Chart of Accounts
 The Manufacturing Cost
 Accounting Cycle
 The factory ledger
Job Order Costing
5.  Cost Systems: Actual or Standard Chapter 5
 Cost accumulation process: job order or process
 Job order cost Accumulation Procedures
Process Costing: Cost of Production Report
6.  Characteristics and Procedures of Process costing Chapter 6
 Costing by department
 Product flow
 Procedures for Materials, Labor and Factory Overhead Costs
 The cost of Production Report
Process Costing: Average and FIFO Costing
7.  Increase in unit cost due to Addition of Materials Chapter 7
 Increase in unit and change in unit cost due to addition of Materials
 Beginning work in process inventories

8. Exercises, Problems & 2nd quiz

MID TERM EXAM

Controlling and Costing of Materials

9.  Material Costing Methods Chapter 12
 Cost of Material in inventory at the end of a period
 Costing procedures for Scrap, Spoiled goods, and Defective work.
 Cost Accounting

Quantitative Models for the Materials Planning and Control

10.  Planning Materials Requirements Chapter 13
 Material control
Controlling and Accounting for Labor
11.  Basis for labor cost control Chapter 14
 Productivity and efficiency measurement and labor cost
 Procedures for labor costing
 Computerized labor procedures
 Incentive Wage Plans
 Wage incentive time
Accounting for Labor –Related Costs
12.  Overtime earnings Chapter 15
 Bonus payments
 Vacation pay
 Labor related deductions
 Recording Labor cost
Factory Overhead; Planned, Applied, and Actual
13.  FOH-Predetermined Chapter 9
 FOH-Actual
 FOH-Applied
 Over and under applied
Factory Overhead: Departmentalization
14.  The concept of departmentalization Chapter 10
 Producing and service Department
 Direct departmental expenses in Producing and service department
 Indirect departmental expenses
 Establishing departmental Overhead rates
 Use of Departmental Factory Overhead Rates
 Actual factory overhead departmentalized
 Over or under factory overhead
Revision and comprehensive quiz
15.

Final Exam

OUTLINE OF SESSIONS AND PREPARATORY READINGS

Session 1:

Financial Statements: The Basis for Planning and Control

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), chapter 2

Further readings:
 Brewer, P., Garrison, R. H., & Noreen, E., W. Managerial Accounting (10th Ed.). McGraw
Hill, chapter 1
 Cost Accounting

 Colin Drury , Management and Cost Accounting (6th edition) . Cengage Learning, chapter 1

Session 2:
Financial Statements: The Basis for Planning and Control- Exercises, Problems &Cases

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), chapter 2

Further readings:
 Charles T. Horngren, Srikant M datar,George Foster , Cost accounting (12th
edition),Prentice Hall Of India Pvt ltd ,Chapter 1
 Kishore, M., Ravi ,Cost accounting, Chapter 1& 2
 http://www.accountingformanagement.com/cost_classification_on_financial_statements.
html

Session 3:
Costs: Concepts, Uses and Classification

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), Chapter 3

Further readings:
 Brewer, P., Garrison, R. H., & Noreen, E., W. Managerial Accounting (10th Ed.).
McGraw Hill, Chapter 2.
 Colin Drury ,Management and Cost Accounting (6th edition), Cengage Learning ,Chapter
2
 Manash Dutta, Cost accounting :Principles & Practice , Chapter 1
 Vanderbeck , Principles of Cost Accounting (13 edition),Thomson, Chapter 1
 http://www.accountingformanagement.com/cost_terms_concepts_and_classifications.htm
l
 http://www.accountingformanagement.com/Manufacturing_and_nonmanufacturing_cost.
html

Session 4:
The Cost Accounting System: Design and Operation

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), chapter 4
 http://www.accountingformanagement.com/variable_cost_and_fixed_cost.html
 Cost Accounting

Session 5:
Job Order Costing

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), Chapter 5

Further readings:
 Guan.Hansen.Mowen, ,Cost Management , Chapter 5
 Ravi M. Kishore ,Cost and management Accounting ,Chapter 5
 Colin Drury ,Management and Cost Accounting (6th edition), Cengage Learning ,Chapter 4
 Charles T. Horngren, Srikant M datar,George Foster , Cost accounting (12th edition),Prentice
Hall Of India Pvt ltd Chapter 4
 http://www.accountingformanagement.com/job_order_costing_advantages_disadvantages.ht
ml
 http://www.accountingformanagement.com/job_order_costing_exercises.html

Session 6:
Process Costing: Cost of Production Report
Key reading:
 Matz, A., & Usry , M.F. Cost Accounting: Planning and Control (7th Ed.),Chapter 6

Further readings:

 Charles T. Horngren, Srikant M datar,George Foster ,Cost Accounting,(12th edition),Prentice

Hall Of India Pvt ltd ,Chapter 4
 Guan.Hansen. Mowen, Cost management, Cengage learning, Chapter 6
 Manash Dutta ,Cost accounting :Principles & Practice, Chapter 9
 Colin Drury , Management and Cost Accounting (6th edition), Cengage Learning ,Chapter 5
 Vanderbeck ,Principles of Cost Accounting(13 edition),Thomson, Chapter 5
 http://www.accountingformanagement.com/cost_of_production_report.html

Session7:
Process Costing: Average and FIFO Costing
Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.),chapter 7

Further readings:
 Colin Drury, Management and Cost Accounting (6TH edition), Cengage Learning ,Chapter 5
 Vanderbeck, Principles of Cost Accounting, (13 edition),Thomson, Chapter 5
 Guan. Hansen. Mowen ,Cost Management ,Cengage Learning, Chapter 6
 http://www.accountingformanagement.com/process_costing_system_case_study.html

MID TERM

Session 8:
 Cost Accounting

Exercises & Problems

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.),chapter 6& 7

Further readings:
 By Charles T. Horngren /George Foster & Srikant M. Datar, Cost Accounting A Managerial
Emphasis(12 edition),Prentice Hall of India Pvt Ltd, Chapter 4
 http://www.accountingformanagement.com/process_costing_system_exercises_problems.htm
l

Session 9:
Controlling and Costing of Materials

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.),chapter 12

Further readings:
 Vanderbeck, Principles of Cost Accounting, (13 edition),Thomson, Chapter 2
 Ravi M. Kishore, Cost and management Accounting, Chapter 2
 Manash Dutta, Cost accounting :Principles & Practice, Chapter 2
 http://www.accountingformanagement.com/controlling_and_costing_materials.html

Session 10
Quantitative Models for the Materials Planning and Control

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.),chapter 13

Further readings:
 Vanderbeck, Principles of Cost Accounting, (13 edition),Thomson, Chapter 2
 Ravi M. Kishore ,Cost and management Accounting , Chapter 2
 Manash Dutta ,Cost accounting :Principles & Practice ,Chapter 2
 http://www.accountingformanagement.com/materials_and_inventory_cost_control.html

Session 11:
Controlling and Accounting for Labor

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.),chapter 14

Further readings:
 Ravi M. Kishore, Cost and management Accounting, Chapter 3
 Manash Dutta, Cost accounting :Principles & Practice, Chapter 3,.
 Vanderbeck, Principles of Cost Accounting, (13 edition),Thomson ,Chapter 3
 Cost Accounting

Session 12:
Accounting for Labor –Related Costs

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.),chapter 15

Further readings:
 Ravi M. Kishore ,Cost and management Accounting, Chapter 3
 Manash Dutta ,Cost accounting :Principles & Practice, Chapter 3,
 Vanderbeck ,Principles of Cost Accounting (13 edition),Thomson Chapter 3

Session 13:
Factory Overhead; Planned, Applied, and Actual

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), chapter 9

Further readings:
 Ravi M. Kishore ,Cost and Management Accounting, Chapter 4
 Manash Dutta ,Cost accounting :Principles & Practice, Chapter 4
 Vanderbeck, Principles of Cost Accounting(13 edition),Thomson, Chapter 4
 http://www.accountingformanagement.com/procedure_for_materials_labor_foh_process_cos
ting.html

Session 14:
Factory Overhead: Departmentalization

Key reading:
 Matz, A., & Usry, M.F. Cost Accounting: Planning and Control (7th Ed.), Chapter 10

Further readings:
 Ravi M. Kishore ,Cost and management Accounting ,Chapter 4
 Manash Dutta ,Cost accounting :Principles & Practice, Chapter 4
 Vanderbeck ,Principles of Cost Accounting(13 edition),Thomson, Chapter 4

Session 15: Exercises & Problems, & Revision

FINAL EXAM
GOOD LUCK