ACC 204: Cost Accounting

Learning Outcomes

At the end of this course, students should be able to:

1. explain the nature and objective of a cost accounting system;
2. describe the organisation of cost accounting department and its relationship with other departments;
3. explain elements of cost, cost classification, estimation and behaviour;
4. account for materials, labour and overhead in a cost accounting system;
5. explain costing methods – specific order and process costing;
6. familiarise with the treatment of process gains and losses;
7. prepare integrated and interlocking accounts;
8. discuss the concept of marginal and standard costing with simple variance analysis; and
9. explain functional budgets and cash budget.

Course Contents

Definition of cost and cost accounting. The need for and installation of a cost accounting system, objectives of a cost accounting system, organisation of a cost accounting department and its relationship with other departments, advantages and limitations of a cost accounting system. Differences between cost and financial accounting, and cost and management accounting.

Classification and estimation of cost into variable and fixed elements. Account for materials, labour and overhead. Preparation of specific order costing (job, batch and contract), process costing, including treatment of process gains and losses in line with IAS 2, integrated and interlocking accounts, explain and apply costing techniques marginal costing, (break-even and CVP analysis), standard costing. Prepare and explain simple variance analysis, and explain and prepare functional budget and cash budget.