BITM Cost and Management Accounting

Cost & management accounting: Meaning, objectives, importance, advantages and limitations, differences between financial accounting and cost accounting, management accounting and cost accounting. Cost concept and its classification. Concept and method of cost segregation: Two point method, Least square method and Estimation of cost.

Materials/Inventory: Concept, reasons and objectives for holding material / inventory. Inventory Control: Meaning, importance and techniques, Economic order quantity with and without discount, Re-order, maximum, minimum, danger and average stock levels under the condition of certainty.

Labour cost: Concept and need for control of labour cost. Incentive wages Plan: Halsey and Rowan premium Plan, Taylor's differential piece rate system, Gantt's Task and Bonus plan.

Overhead cost: Meaning, classification, importance. Accounting and Distribution of overhead cost: Allocation, apportionment and absorption of overhead cost.

Absorption costing: Concept, importance, income statement under absorption costing technique, limitations. Variable costing: Concept, importance, income statement under variable costing technique, reconciliation statement between absorption and variable costing techniques showing the causes of difference. Cost Volume profit analysis: Meaning, importance, Contribution margin analysis, Break-even-analysis: under constant and the following underlying situations: changes on selling price, fixed cost, & variable cost, and under step fixed cost, Break-even-analysis of multi-products firms, assumptions of CVP analysis and its limitations.

Standard costing: Concept, preliminaries to establish standard costing system, difference between standard costing and budgetary control, advantages and limitations. Variance analysis: Material variance (Concept and calculation of cost, price, usage, mix and yield variances), Labour variance (Concept and calculation of cost, efficiency, rate, mix, idle time and yield variances).

Flexible budgeting: Limitations of static budget, concept, importance of flexible budget, flexible budgeting for overhead cost control, flexible budget in different level of activity. Overhead cost variance: Concept and calculation of capacity, efficiency and spending variances.

Concept and objectives of budget. Preparation of budget for manufacturing and non-manufacturing concern: sales budget, production budget, purchase budget, direct labour and overhead cost budget. Cash collection and disbursement budget, budgeted income statement, budgeted balance sheet.

Concept of decision making, types of decision making: Make of buy decision, Drop or continue decision, Accept or reject special offer, decision to sell or further processing.