Cost Accounting (Paper-8) CMA Inter Group 1

INTRODUCTION TO COST ACCOUNTING [40 MARKS]
1. Introduction To Cost Accounting

•  Definition, Scope, objectives and significance of cost accounting, its relationship with financial accounting and management accounting
•  Cost Objects, Cost centers and Cost Units
•  Elements of cost
•  Classification of costs

A. Cost Ascertainment - Elements of Cost
1. Material Costs

• Procurement of Materials
• Inventory Management and Control
• Inventory Accounting & Valuation
• Physical Verification, treatment of losses
• Scrap, spoilage, defectives and wastage

2. Employee Costs

• Time keeping, Time booking and payroll
• Labour Turnover, Overtime and idle time
• Principles and methods of remuneration and incentive schemes
• Employee cost reporting and measurement of efficiency

3. Direct Expenses

4. Overheads

• Collection, classification and apportionment and allocation of overheads
• Absorption and treatment of over or under absorption of overheads
• Reporting of overhead costs

B. Cost Accounting Standards (Basic Understanding only) (CAS 1 to CAS 24)

C. Cost Book Keeping

• Cost Accounting Records, Ledgers and Cost Statements
• Items excluded from cost and normal and abnormal items/cost
• Integral accounts
• Reconciliation of cost accounting records with financial accounts
• Infrastructure, Educational, Healthcare and Port services

METHODS OF COSTING [30 MARKS]
2. Methods of Costing

•  Job Costing
•  Batch Costing
•  Contract Costing
•  Process Costing – Normal and abnormal losses, equivalent production, Joint and By Products
•  Operating Costing or Service Costing – Transport, Hotel and Hospital

COST ACCOUNTING TECHNIQUES [30 MARKS]
3. Cost Accounting Techniques (Basic Understanding only)
(A) Marginal Costing

• Meaning of Marginal Cost and Marginal Costing
• Absorption Costing vs. Marginal Costing
•  Break-even analysis
•  Margin of safety
•  Application of Marginal Costing for decision making (simple problems only)

(B) Standard Costing & Variance Analysis

• Concept of standard cost and standard costing
• Advantages and limitations
• Computation of variance relating to material and labour costs only

(C) Budget and Budgetary Control (simple problems only)

•  Concepts, Types of Budgets
•  Budgetary Control vs. Standard Costing
•  Advantages and limitations
•  Preparation of Budgets (simple problems only)