FACULTY OF COMMERCE

DEPARTMENT OF ACCOUNTANCY

COST ACCOUNTING AND CONTROL II (AC 217)

MODULE – SEMESTER 1I

COURSE PURPOSE

The purpose of the course is for the student to gain the necessary knowledge, skills,
attitudes and competencies to analyse and solve problems relating to the general
principles of cost accounting, with specific reference to manufacturing and service
environments

COURSE AIMS

The lecturer plans to deliver lectures in class and to provide tutorials at the end of
each chapter. Assignments form an important part of the learning process for this
course. Two compulsory assignments shall be set to test progress of the student
before the final examination. The assignments will contribute 30% towards a
student’s final mark for the course.

COURSE OBJECTIVES

This course is designed to provide the student with facts; theories and concepts in
Management Accounting. This is the second course; in a two part course series (the other
begin Cost Accounting and Control 1 covered during last semester). A sound grounding
in cost concepts and management accounting application is essential for a proper
understanding in the subsequent years.

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EXAMINATION
At the end of the semester the student will write a four-hour paper. The paper counts 100
marks. The examination mark contributes 70% of the final mark and as explained above
the assignments will contribute 30%. There is also a sub-minimum of 40% applicable for
the final examination.

Admission to the examination is not automatic. To be admitted to the examination, the

student must have obtained at minimum of 12% from the assignments

EVALUATION

The course shall be evaluated by way of student and peer evaluations.

COURSE CONTENT

The course content is as follow;

1. BUDGETING, PLANNING AND CONTROL

1.1. The Planning and control functions of business
1.2. Planning vs control
1.3. Reasons for budgets
1.4. The Budgeting process
1.5. The Cash budget problem
1.6. Problem on forecasting

2. VARIANCE ANALYSIS
2.1. Reasons for variances
2.2. Material variances
2.3. Labour variances
2.4. Sales variances
2.5. Idle time variances
2.6. Fixed overhead variances
2.7. Marginal costing vs Full absorption costing – implications on variances
2.8. The operating statement
2.9. Investigating variances

3. STANDARD COSTING
3.1. Types of standards
3.2. Reasons for standard costing
3.3. The Process of setting standards
3.4. Updating standards
3.5. Standards and the New Manufacturing Environment

4. MARGINAL COSTING AND BREAK EVEN ANALYSIS

4.1. The reasons for marginal costing (comparison with Absorption costing)
4.2. The marginal costing statement

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 4.3. Key Ration from the marginal costing statement
4.4. Cost-profit Volume Analysis
4.5. The Concepts of Operating Leverage

5. RELEVANT COSTING
5.1. Definition and terms
5.2. Terms in Relevant
5.3. Applications in relevant costing:
5.3.1. Make or buy
5.3.2. Minimum pricing
5.3.3. Closing down product line or division
5.3.4. Limiting factor decisions
5.4. The relevant cost of materials

6. NEW PERSPECTIVES IN MANAGEMENT ACCOUNTING

6.1. Why the new perspectives
6.2. Activity Based Costing (ABC)
6.3. Flash Back Costing
6.4. Just In Time (JIT)

Essential reading material

1. Cost Accounting: A Management Emphasis- 5th Edition by Horngren C.T. Published

by Prentice Hall.
2. Costing: T. A. Lucey – 4th Edition by DP Publishing
3. Management and Cost Accounting: C. Drury- 8th Edition by Brendan George