This presentation deals with 23 cost accounting standards in summary difference between traditional and modern costing techniques, why the USA doesn't use cost standard, are we bound to cost standard or why we need such kinds of cost standards while others do not?

1. “DEWAN AZMAL HOSSAIN
“
ACCOUNTING & INFORMATION
SYSTEMS
21ST BATCH
UNIVERSITY OF DHAKA

2. CONTENTS
“
How cost standards
influence cost accounting?
Why USA don ’t use cost
standards?
Use of cost standards
in Bangladesh?
Traditional systems vs
cost standards

3. Influence of cost standard in
Cost accounting

4. Cost Estimation
Indirect cost rates
Cost allocation base
Indirect cost
Cost Concepts and
Classification
Continued……….
Classify cost properly and reduce misstatement.
To provide proper optimization principle related to indirect cost.
Cost center, Acquisition of indirect cost, Allocation of indirect cost, cost objects
Provide guidance on computing indirect cost rate
Allocation rate: Total capacity related indirect cost / Cost driver activity level
gives various estimation methods like, accounting analysis method ,
engineering method, high-low method
To identify appropriate cost allocation base for indirect cost.
3 allocation base . Transaction driver, duration driver, intensity driver

5. Support Department Cost
Joint costs
Target Costing
Life Cycle costing
Continued……….
Properly allocate cost to support departments
Ensure that each element of cost of the life
cycle has been considered during planning stage
This costing system is mainly based on determining the target cost of a product
considering the target price of that product which
potential customer is willing to pay
Decision like resource allocation, make decisions,
price fixation etc. are facilitated by using this method

6. Process Costing
Job Order Costing
Standard Costing
Kaizen costing
Activity Based Costing
Continued……….
large number of homogenous products passing through a series of process
FIFO, Weighted average and Standard costing is used as alternative.
This standard provides guidelines to trace cost significantly to cost object.
Like in unit, batch, product ,facility level
ensure that a direct cost is job that consumes the resources and indirect cost
should be accumulated and
allocated to jobs in a manner that promotes a reasonable basis of cost allocation.
environment of continuous development without compromising quality
assigning the costs for M/OH as expected cost

7. Cash Flow
Product Mix Decision
Budget and Pro Forma
Financial Statements
Transfer Pricing
Performance Measurement
Continued……….
It provides the cost consideration for long run and the short run activity
For setting prices for company’s benefit.
Market price ,Cost based price , Admin price, Negotiated price
Ensure managers that the flow of regular transactions are effectively
recorded.
Comparing the outcome and analyzing information of a company.
Main control of management to establish goals and controls

8. Activity Based Management
Capital Budgeting
Enterprise Resource Planning
Strategic Cost Management
Continued……….
to justify every activity increasing value
to their loyal customers
how capital budgeting techniques and factors
influence cost accounting and cost analysis or vice versa
Uses for integrated processes and functions within company
Deals with measuring and managing
cost and aligning them to business strategy

9. Why USA do not use cost
accounting Standards?

10. ICMA
CAS are a set of 19 standards and rules
promulgated by the United States Government for use in determining costs on negotiated procurements.
CAS
product costing,
budgeting,
management accounting,
investment appraisal
and business decision making.
designed to achieve uniformity and consistency
in the cost
accounting principles followed by
defense contractors and subcontractors

11. 1 2 3 4 5
cost accounting
enforces to
management accounting
and they place accounting
emphasize on
financial reporting.
USA
generally
prefer
software
To record
Cost and
Making decision
Like , ERP(Enterprise
Resource planning)
Their accounting
cultural perspective.
They think
it’s not necessary for more
detailed method
(Cost Accounting)
to invest
heavily
(Cost
effectiveness)
They
emphasize more
on precision.
(Managerial
View)
They launch
Their product
quickly
So they depends
More on automated
And software based
Info.

12. Difference between
Traditional method
Modern cost standard

13. Traditional method vs Modern cost method
Financial statement analysis
Standard costing
Cash flow analysis
Marginal costing
Trend analysis
Absorption costing
Differential costing
Opportunity costing
Activity based costing
Target costing
Just in Time (JIT)
Total quality management
Process reengineering
Theory of constraints

14. USA of use cost
accounting Standards in
Bangladesh
Are we bound to follow
them?

15. Modern costing systems are not widely exercised
in Bangladesh both in private and public sector
manufacturing enterprise
but few multinational corporations are using
some of techniques like
Just in Time and Total quality management.
Bangladesh uses the following costing systems :
ICMAB has published
Bangladesh Cost Accounting Standards on 14 December 2014

16. Bangladesh uses the following costing systems :
Financial statement analysis
Standard costing
Cash flow analysis
Differential costing
Opportunity costing
Cost estimation
Joint costing
Target costing
This standards are to be followed in public limited
Companies were cost audit is made
Mandatory through govt. gazette notification

17. Are we bound to follow cost standards?
In a single word, we are not bound to follow standard
When cost is not mandatory. Other reasons are :
1. In Bangladesh, historical information is given more important.
2. Lack of awareness and Understanding the benefit of its use.
3. Consider involvement of extra cost.
4. Lack of trained and experienced personnel in this field
5. Here personal experience is used more than analytical overview.