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Syllabus: CICTA 102

11.1 Course Objective

The course provides an outline of the scope, principles and objectives of cost and management accounting. It serves as the introductory part of the whole cost and management accounting course. The course seeks to instil in students the cost process in collection, analysis and presentation of cost information. The syllabus is based on practical industry applications regarding students? competencies in applying principles studied in the manufacturing as well as service-oriented organizations.

11.2 Course Description

The course is concerned with gathering and provision of information required by management of all levels, for the purposes of formulation of organisational policies, planning of organisational activities in the long, medium and short term. Costing principles, methods and techniques are studied in detail in this module.


11.3.1 Introduction to the Concept of Cost and Management Accounting
The definition of cost and management accounting

* Cost and Management Accounting primarily is concerned with data gathering for internal and external use, analysis, processing, interpreting and communicating.

* The function of Cost and Management Accounting.

* Application of cost and management accounting techniques from statistics and operational research point of view.

11.3.2 Cost Accounting and Cost Ascertainment, Cost Behaviour, Planning and Budgeting.

Among the topics to be treated in this category are the core differentiation between cost accounting and management accounting particularly with regard to provision of information for planning, control, budgeting and decision making.

The following distinctions must be explained to the comprehension of the students

1. Cost unit as a concept: Cost unit of production as different from unit of service.

2. Direct Cost, comprising direct materials, direct labour and direct expense.

Direct materials + direct labour + direct expense = PRIME COST.

* Prime Cost + Overheads = total cost. These distinctions must be known to the student.

* Cost Centre, Cost Allocation and Apportionment are explained to the understanding of students.

* The basic cost ascertainment, comprising the distinction between Direct Cost and Indirect Cost which build up to Total Cost are core topics in this delivery.

11.3.3 Cost Systems

In this section different types of cost systems are explained to the student. For instance the components of Indirect cost as different from the components of Direct Cost, Cost Allocation as different from Cost Apportionment. Differentiation between Job Costing, Batch Costing and Contract Costing.

* Direct cost involving Cost allocation leading to Prime Cost as Distinguished from indirect cost involving cost allocation and apportionment, Production Cost, Overhead Cost, Absorption Cost,

Prime Cost, Production cost and Overheads, leading Factor Cost are among the major highlights. The other dimensions of Indirect Cost consisting of Administrative, Selling and Distribution Cost, General overhead cost, factory cost leading to Total Cost are explained. Meaning, Prime Cost + Production Overhead (Factory Cost) = Total Cost.
* Further distinctions must be made between absorption costs, marginal cost and Variable Cost.

* Computations of the mentioned Cost systems must be known to students including calculations involving Marginal Cost, Absorption Cost, Variable Cost and other cost elements. Cost relations with Revenue must be covered.

3.4 Fundamentals and Elements of Cost
* Evaluation of stock control (ordering, purchases, receipts, storage and issue of materials).

* Computation of stores pricing (receipts and issues and different pricing methods, using FIFO, LIFO, standard and weighted average).

* Assessment of profit reporting using various stock evaluation methods for raw material, work-in-progress and finished goods.

* The accounting concept of inventory control techniques (economic order quantity (EOQ) and other control levels).

* Accounting for the treatment of inventory losses, transportation and material handling costs.

* Analysis of different remuneration methods, distinguishing between direct and indirect labour costs of products of organisations.

* The concept of overheads allocation and absorption into cost of products and services.

* Computation of overhead absorption rates and determination of cost of product or service.

* Assessment of predetermined overhead rates and actual overhead rates.

* Accounting for the treatment of under/over recovery of overheads.

* Appraising the methods of overhead recovery.

* Evaluation between overhead absorption and overhead apportionment (allotment, allocation, apportionment, absorption, etc.)

11.3.5 Methods of Costing (Job, Batch, Contract and Process Costing)
* Difference between Job, Batch and Contract Costing

* Explain the characteristic features and computation of job costing.

* Evaluate the features and preparation of batch costing.

* The features of contract costing explained.

* Calculation of contract accounts and determination of attributable profit.

* Explanation of the mode and process of process costing

* Outlining and discussing the features of process costing.

* Preparation of process accounts.

* Evaluation and treatment of work in progress and equivalent units.

* Accounting for the treatment of normal and abnormal gains / losses.

* Discussion of process costing for decision making and cost control/reduction.

* Explanation of methods of apportioning joint costs to joint products.

* Accounting for by-products, scrap, waste and defective units in a manufacturing concerns.

* Service and operating Costing Methods are discussed

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