SECTION A: COST MANAGEMENT [20 MARKS] 1. Cost Management (a) Developments in Cost Management: (i) Life Cycle costing (ii) Target costing (iii) Kaizen Costing (iv) Value Analysis and Value Engineering (v) Throughput Costing (vi) Business Process Re-engineering (vii) Back-flush Accounting (viii) Lean Accounting (ix) Socio Economic Costing (b) Cost Control and Cost Reduction – Basics, Process, Methods and Techniques of Cost Reduction programme.
SECTION B: STRATEGIC COST MANAGEMENT TOOLS TECHNIQUES [50 MARKS] 2. Decision Making Techniques (a) Marginal Costing- Differential costing-CVP Analysis – Profit Volume Graphs – Contribution Approach (b) Decisions involving alternative choices – Optimum utilization of resources – Make or Buy – Evaluation of Orders – Multiple scarce resource problems- Product sales pricing….etc (c) Pricing Decisions and Strategies – New Product Pricing, Use of Costs in Pricing, Sensitivity Analysis in Pricing Decisions; Monopoly Pricing vs. Competitive Pricing; Bottom Line Pricing (d) Costing of Service Sector – methods, pricing, performance measurement (e) Transfer Pricing - Objectives, Methods (Cost Based, Market Price Based, Negotiated Pricing), Advantages and Disadvantages, Criteria for setting Transfer Prices, Transfer Price in different situations, Situations causing Conflicts and resolving the Conflicts; (f) Relevant Cost Analysis : Relevant Cost, Irrelevant Costs - Sunk or Historical Cost, Committed Cost, Absorbed Cost, Situations where Fixed Costs become relevant for decision – making and its related implications (g) Profitability Analysis – Product wise / Segment Wise/ Customer wise.
3. Standard Costing in Profit Planning (a) Variance Analysis - Investigation of Variances, Planning and Operating Variances, Controllable/ Non-controllable Variances, Relevant Cost Approach to Variance Analysis; Variance analysis under marginal costing and absorption costing; Activity Ratios; Application of budgetary control and Standard Costing in Profit planning, Standard Costing Vs Budgetary Control, Reconciliation of Actual Profit with Standard Profit and /or Budgeted Profit. (b) Uniform Costing and Inter-firm comparison.
4. Activity Based Cost Management – JIT and ERP (a) Activity Based Cost Management - Concept , purpose, benefits, stages, relevance in decision-making and its application in Budgeting, Responsibility accounting, Traditional Vs. ABC System – comparative analysis (b) JIT – introduction, Benefits, Use of JIT in measuring the Performance (c) ERP and its applications in strategic cost management (d) Bench Marking
5. Cost of Quality and Total Quality Management (a) TQM - Basics, Stages, Principles, Control, Corrective actions (b) PRAISE-Steps, Problems, implementation (c) PARETO Analysis (d) Quality Costs
SECTION C: STRATEGIC COST MANAGEMENT – APPLICATION OF STATISTICAL TECHNIQUES IN BUSINESS DECISIONS [30 MARKS] 6. Application of Operation Research and Statistical Tools in Strategic Decision Making (a) Learning Curve, (b) Linear Programming (Formulation only) (c) Assignment, (d) Transportation (e) Simulation (f) Network Analysis – CPM / PERT