1. Introduction:
Manufacturing Concerns- Definition, Characteristics, Manufacturing Activity- Manufacturing vs.
Nonmanufacturing Concerns- Organization Structure- producing Departments- Service
Departments-Chart of Accounts- Flow of Costs- Financial of a Manufacturing Concerns.
2. Cost accounting as a Discipline:
Definition and objectives of Cost Accounting- Limitations of Financial Accounting- Importance of
Cost Accounting Cost Accounting Vs financial Accounting Cost Accounting Vs. Management
Accounting Evolution of Cost Accounting Relationship of Cost Accounting with Mathematics,
Economics and Statistics.
3. Cost Concepts and Classification:
Concepts of Cost - Cost, Expenses, Loss and Assets - Classification of Costs: Manufacturing vs.
Non- Manufacturing costs, Basic Elements- Wise costs, Product vs. Period costs, Cost in relation to
the cost objects, Behavioral classification, Functional Classification, Classification in terms of
controllability, Classification on the basis of time when computed, Classification for decision
making, Classification on Financial Statement- Cost center and Cost Unit- Cost object- Cost
Accounting Cycle - Factory Cost Flow - Cost Sheet - Cost Statement - Basic Cost Accounting
Principles and Cost Concepts.
4. Accounting for Materials:
(a) Purchasing and storing Materials: Need for Materials Control- Materials Purchase procedures:
Purchase Requisition, Purchase Order, Receiving Report, Debit/ Credit Memorandum- Accounting
for Materials Recording Purchase of Materials in Materials /Stores Ledger, Recording Returns,
Recording payments for Materials- Special purchasing procedures: Bill of Materials, Economic
Order Quantity (EOQ), Just-In-Time Inventory Systems- Import Procedures and Documents-
centralized and Decentralized purchasing- Storekeeping and Control of Materials: Classification
and Codification of Stores- Specific Inventory Control Methods-Fixation of Stock Level (Maximum
and minimum Levels, Reorder point and reorder Quantity, Safety Stock)- Selective Control or the
ABC plan, Order Cycling, Min- Max Method, Two- Bin System, and Automatic Order System-
physical Control of Materials- Stock out Losses or Over- ages- Control of Spoilage or Waste-
perpetual vs. periodic Inventory system- Control Ratios- Dead Inventory
(b) Issuing Materials to production: Materials Requisition, Materials Requisition Journal, Return of
Materials to the Storeroom- Determining the Cost of Materials Issued to production: Actual Cost
Methods (FIFO, LIFO, Simple Average, Weighed Average, periodic Simple Average, and Moving
Average prices), Standard Cost, Market price and Others Methods- Treatment of discrepancies in
material receiving and surplus and deficiencies in stock taking- IAS-2 (revised 1993), Inventories:
Measurement of Inventories (lower of cost and net-realizable value), Cost of Inventories, Cost of
Purchase, Costs of Conversion, Other Costs Cost Formulas (specific identification of the individual
costs, FIFO or weighted Average cost formulas), Net Realizable Value, Recognition as an Expense,
Disclosure.
5. Accounting for Labor:
Payroll Accounting- Direct and Indirect Labor- Labor Cost Records: Timekeeping, Clock Chards,
Time Tickets, Daily Time Reports- payroll Register, Shift premiums, Overtime premiums, payroll
Deductions, Semi-monthly Salaried Employees, Employees Earnings Record- Recording the
payroll paying the payroll- Time Ticket Analysis- Charging Labor Costs to production- Employerâs
payroll Taxes- Recording Employerâs payroll Taxes- Fringe Benefit Costs- Direct Labor and
Automation- Time Recording for piece workers- Idle time â Overtime - Treatment of â Overtime
Cost- Outworks - Casual workers Labor Turnover- Minimum Guaranteed Wage and Incentive
plans.
6. Accounting for Overheads:
a) Introduction to Overheads:
Definition- Classification of Overheads (Functional, Element- wise and Behavioral)- Grouping and
codification.
b) Accumulation and Distribution of Factory Overhead:
Classifying Factory
Overheads Costs-Accumulating Actual Factory Overheads Costs-
Departmentalizing Factory Overhead(Separate Control Account for Overheads Costs- Recording
Factory Overheads Costs Distributing Service Department Costs- Methods of Allocating Service
Department Costs-(Direct Method, Step Method, Equation/Algebraic Method) Recording the
Distribution of Overheads Costs
c) Applying Overhead to Production:
Application of factory Overhead- predetermined factory overhead Rate- Applying Factory
overhead- Recording Applied factory overhead Analysis of under- or Over- Applied overhead.
d) Accounting for Non-manufacturing Overheads:
Administrative, Selling and Distribution Overheads.
7. Cost Sheet/Statement of Cost of Goods Manufactured:
Definition â Unit Cost â Cost of Materials Available- Cost of Materials Consumed- Prime Costs-
Works Costs- Total Current Manufacturing Costs, Total Costs of Goods in Production. Costs of
Goods Manufactured, Cost of Goods Sold- Cost of Sales - Determination of Selling Price - Tender
Price or Quotation or Bid.
8. Integral Accounting System:
Definition- Features- Advantages of Integration- Journal Entries- Preparation of Cost Sheet â WIP
Account, Finished Goods Account, Cost of Goods Sold Account, Cost of Sales Account-
Preparation of Financial Statements.