Cost managerial accounting syllabus outline

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INSTITUTE of BUSINESS MANAGEMENT
College of Business Management
Department of Finance and Accounting
An introduction to Managerial & Cost Accounting ACC 401
Faculty: Muhammad Asim Khan
1. Overall aims of course
The course is an introduction to the Managerial and Cost Accounting. The course focuses
on basic accounting concepts.Success in any organization – fromthe smallest corner store
to the largest multinational corporationrequires the use of cost accounting concepts and
practices. Cost accounting provides key data to managers for planning and controlling, as
well as costing products, services, and customers.
The centralfocusof this courseis how managerial accountinghelps managers makebetter
decisions. Management Accountants are increasingly becoming integral members of
decision making teams instead of just data providers. Different costs for different
purposes theme is used throughout this course. By focusing on basic concepts ,analysis,
uses, and procedures instead of procedures alone, we recognize managment accounting
as a managerial tool for business strategy and implementation .We also prepare students
forthe rewards and challenges facingthem in the professional costaccounting worldboth
today and tomorrow.
2. Intended learning outcomesofcourse (ILOs)
a. Knowledge and understanding:
 To analyze the role of management accounting within the firm and society.
 To make decisions for different purposes in an organization.
 To study the managerial tools for business strategy and implementation.
b. Intellectual skills:
 Analysis:can analyze with guidance using given classifications/principles
 Synthesis:can collect and categorize ideas and information in a predictable and
standard format
 Evaluation: can evaluate the reliability of data using defined techniques and/or tutor
guidance
 Application: can apply given tools/methods accurately and carefully to a well defined
problem and begin to appreciate the complexity of the issues
c. Professional and practical skills:
 Application of skills: can operate in predictable, defined contexts that require use of a
specified range of standard techniques

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 Autonomy in skill use:is able to act with limited autonomy, under direction or
supervision, within defined guidelines
3. Contents:
Session
Topic
1 Introduction
Introduction to students and teacher. Distribution and introduction to course outline.
Explain classrules and regulations. Explain teachingmethodology and marks allocation.
Appointment of class representative.
Discuss similarities between managerial and financial accounting. Characteristics of
useful management accounting information. Role of management in an organization.
Managerial function and decision making. Role of the controller.
Learning Outcomes:
1. Understand how accountingcan facilitate planning and control
2. Describe the differencebetween line management and staff management
3. Understand the importance of professional ethics to management accountant
2 The Accountant’s Role in the organization
In this session, we describe management and cost accounting and how accounting
supports management accounting and financial accounting. Topics such as value chain
analysis, key success factors planning and control systems are discussed. Cost benefit
approach is also explained. Professional ethics in cost accounting is emphasized.
Learning Outcomes:
1. Describe how management and cost accounting supports management and
financial accounting
2. Understand how management accountants affectstrategic decisions.
3. Distinguish between the planning and control decisions of mangers.
4. Describe the set of business functions in the value chain.
5. Understand how management and cost accounting fits into an organization’s
structure.
6. Understand what professional ethics mean to management accountants
Pedagogy
1. Pre Class independent study
2. Input session (students centered)
3. Lecture with discussion
4. Review and evaluation (student centered)
3 An introduction to cost terms and purposes
In this session costs and costs terminology is discussed. The topics covered in this
session are cost tracing and cost allocation, direct and indirect costs, cost behavior

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patterns, relationships of types of costs, unit costs, manufacturing, merchandising and
service sector companies.
Learning Outcomes:
1. Define and illustrate a cost object
2. Distinguish between direct costs and indirect costs
3. Explain variable costs and fixed costs
4. Distinguish among manufacturing companies, merchandising companies, and
service sector companies.
5. Describe the three categories of inventories commonly found in manufacturing
companies.
6. Differentiate between inventorial costs and period costs.
Pedagogy
4 Income statement and Schedule of cost of goods manufactured
In this session weillustrate theflow of inventorial costsand period costs withexamples.
Prime costs and conversion costs are discussed. Students are explained how to prepare
cost of goods manufactured and income statement in manufacturing industries.
LearningOutcomes
1. Differentiate between inventorial costs period costs.
2. Explain why product costs are computed in different waysfor different
purposes.
3. Explain prime costs and conversion costs.
4. Preparing an income statement witha separate supporting schedules of cost of
goods manufactured.
5. Calculating ending inventory of direct material, workin process and finished
goods.
Pedagogy
5. Exercises in class
5
&
6
Cost behavior and contribution margin reporting
Topics such as Cost behavior and the Income Statement, limitations of a Functional Income
Statement for projecting a future earnings performance, income Statement with a Contribution
Margin Format, Cost Behavior and importance of Linear Cost functions,Variable Cost behavior –

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Curvilinear Cost Functions,Fixed Cost behavior – Impact of Discretionary and Committed Fixed
Costs,Methods of analyzing cost behavior, Use of Absorption Costing Versus Variable Costing,
Comparing Absorption and Variable Costing Net Income, Benefits and Limitation of Variable
Costing are discussed.
LearningOutcomes
1. Recognize the limitations of a functional income statement for managerial use
2. Develop an income statement with a contribution margin format
3. Identify the cost functions involved with variable costs, fixed costs, and mixed costs.
4. Understand how the concept of the relevant range is used with cost behavior.
5. Analyze cost behavior with three methods – visual fit of a scatter diagram, high-low,
and linear regression.
6. Recognize how variable costing is used for internal reporting.
7. Reconcile the difference between variable costing net income and absorption costing
net income.
8. Discuss the benefits and limitations of variable costing.
Pedagogy
7
&
8
Cost-Volume-Profit Analysis
Cost-Volume-Profit assumptions and terminology. Essentials of CVP Analysis. Equation method
& Graph method. Break- even point and Target Income. Target Net Income and Income taxes.
Sensitivity analysis and Uncertainty. Cost planning and CVP. Operating Leverage. Effects of
Sales Mix in income. Contribution Margin versus Gross Margin
Learning Outcomes
1. Understand the assumptions of cost-volume-profit (CVP)
2. Explain the features of CVP analysis
3. Determine the break- even point and output level needed to achieve a target operating
income
4. Understand how income taxes effect CVP analysis
5. Explain CVP analysis in decision making and how sensitivity analysis helps managers
cope with uncertainty
6. Use CVP analysis to plan variable and fixed costs
7. Apply CVP analysis to a company producing different products
8. Distinguish contribution Margin from Gross margin
Pedagogy

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9
&
1
0
Job Order Costing
Job costing and Process costing systems. General approach to Job costing. Time period used to
Compute Indirect-Cost Rates. Normal Job-Costing in Manufacturing. Budgeted indirect costs
and end-of-period Adjustment. Adjusted Allocation-Rate Approach. Proration Approach.
Multiple overhead cost pools
Learning Outcomes
1. Distinguish between job order costing and process costing as well as identify
industries that use each type of system.
2. Trace the flow of transactions through a job order costing system
3. Explain how direct material and direct labor is accounted for in a job order costing
system.
4. Compute a predetermined overhead rate and account for manufacturing overhead in a
job order costing system.
5. Explain why manufacturing overhead is often over applied or under applied during a
given accounting period and what to do with the amount involved
Pedagogy
1
1
1st Mid Term Exam
Students will be tested on their conceptual and applicative grasp of the principles
of cost accounting taught so far. The one hour test should be prepared focusing
sharply on the learning outcomes detailed above
1
2
to
1
4
Activitybasedcosting
Broad averages and its consequences, Under Costing and Over Costing, Simple costing system
using a single indirect- Cost Pool, Refining a costing system, Activity based Costing systems,
Implementing Activity-Based costing systems, Comparing Alternate Costing systems, Using
ABC systems for improving Cost Management and Profitability, Implementing ABC systems,
Case Study – Plastim Corporation, Case Study – Family Super Markets
Learning Outcomes:
1. Explain under costing and over costing of products and services
2. Present three guidelines for refining a costing system
3. Distinguish between the traditional and the activity based costing approaches to
designing a costing system
4. Describe a four part cost hierarchy
5. Cost products or services using activity based costing
6. Use ABC systems for activity based management (ABM)

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7. Compare ABC Costing systems and department costing systems
8. Evaluate the cost and benefits of implementing ABC system.
Pedagogy
1
5
to
1
8
ProcessCosting
Illustrating process costing three cases starting with the simplest case and introducing
additional complexities in subsequent cases. Physicaland equivalent units. Calculation
of product costs and journal entries of process costing. The weighted average process-
costing method is explain ed. Five steps physical flow, equivalent units, summary of
total costs, equivalent unit costs and assignments of total costs is explained with
examples.
The FIFO process-costing method is explained. Five steps physical flow,equivalent
units, summary of total costs, equivalent unit costs and assignments of total costs is
explained with examples. Comparison of weighted average and FIFOmethods of
process costing.
Explain transferred-in costs in process costing. Transferred-in costs in weighted
average and FIFO methods. Hybrid costing systems.
LearningObjectives:
1. Illustrating process costing.
2. Identify the situations in which process-costing systems are appropriate.
3. Calculate equivalent units and understand how to use them.
4. Prepare journal entries forprocess costing systems.
5. Use the weighted average method of process costing.
6. Assignment of total costs into goods transferred to next department and
WIP ending inventory & journal entries.
7. Use the weighted average method of process costing.
8. Assignment of total costs into goods transferred to next department and
WIP ending inventory
9. Transferred-in costs in weighted average costing system
10. Transferred-in costs in FIFO system
11. Hybrid costing system
Pedagogy

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1
9
&
2
0
Spoilage, Rework, and Scrap
In this session wefocusonthree types of coststhat arise as a result of defects – spoilage,
re-work, and scrap. Different types of spoilage i.e normal spoilage and abnormal
spoilage is explained. How do process-costing account for spoiled units. In these
sessions five step procedure for process costing with spoilage is explained. Weighted
average method with spoilage and FIFO method with spoilage are illustrated. Spoilage
in job costing concept is identified.
Learning Outcomes
1. Distinguish among spoilage, rework, and scrap.
2. Describe the accounting procedures for normal and abnormal spoilage.
3. Account for spoilage in process costing using the weighted-average method.
4. Account for spoilage in process costing using the FIFO method.
5. Account for spoilage in process costing using the standard costing method.
6. Account for spoilage in job costing
7. Account for rework in job costing
8. Account for scrap.
Pedagogy
2
1
2nd Mid Term Exam
Students will be tested on their conceptual and applicative grasp of the principles
of cost accounting taught so far. The one hour test should be prepared focusing
sharply on the learning outcomes detailed above
2
2
to
2
3
Decision Making Based on Relevant Information
Managerial Accounting and Decision Making, General Decision making approach,Costs relevant to
Decision making, Evaluating Special Sales orders, Using Opportunity Costs in decision making,
Adding or Deleting Departments or Products,Evaluating Make or Buy Decisions, Joint product cost
treatment – Inventory valuation versus Decision making, Determining the point of Sale for Joint
products,Evaluating Equipment Replacement, Making product mix decisions with constraints,
Relevant costs and pricing decisions, Mark up pricing with absorption costing and variable costing,
Cost Plus Targeted Income Pricing
Learning Outcomes

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1. Describe how the managerial decision making process works and identify the relevant
managerial accounting information required for good decision.
2. Explain what is meant by differential analysis
3. Describe how relevant costs(revenues),differential costs (revenues),unavoidable costs,
sunk costs,and opportunity costs are used in decision making
4. Evaluate a special order pricing situation.
5. Evaluate the addition or deletion of products
6. Evaluate a make or buy decision
7. Distinguish between the treatment of joint product costs for inventoy valuation and for
decision making.
8. Evaluate the replacement of equipment
9. Explain and compare market demand-oriented pricing and cost- oriented pricing.
Pedagogy
2
4
Budgeting:Amanagement tool forFinancial PlanningandControlling
Purpose of Budgeting, Benefits of Budgeting ,Master Budget, Sales Budget, Production budget,
Direct Materials budget,Direct Labor Budget, Manufacturing Overhead Budget, CGS Budget,
Selling Expense Budget, Capital Expenditure Budget ,Cash Budget, Budgeted Income statement and
Budgeted Balance Sheet.
Learning Outcomes
1. Explain how a master Budget is used as a management tool.
2. List the benefits and limitations of Budgeting
3. Distinguish between operating Budget and a financial Budget
4. Prepare and use each of the individual budgets included in the master budget.
5. See how budget performance report are used for control purposes.
Pedagogy
5. Exercise in class
2
5
Standard Costs: Direct Materials and Direct Labor
Introduction to Standard Costs,Benefits of standard costing,Limitations of Standard costs,Methods
for Establishing Standards,Direct material and Direct Labor Standards,Direct Material Variance
analysis,
Direct Labor Variance analysis, Journal entries for standard costs
Learning Outcomes

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1. List the benefits and limitations of standard costs
2. Distinguish between ideal standards and attainable standards
3. Explain how price and quantity standards are developed for direct materials and direct labor
4. Compute cost variances for direct materials and direct labor
5. Identify potential causes ofdirect manufacturing cost variances and the managers
responsible for them.
6. Analyze cost performance with a control chart
7. Prepare journal entries to record a standard cost performance
Pedagogy
2
6
&
2
7
Flexible Budgets and Standard Manufacturing Overhead
Treatment of Manufacturing overhead as a standard cost, Preparation of a Flexible
Budget, Overview of Standard Manufacturing overhead, Differentdefinitions of
production capacity,Using the predetermined overhead rate, Manufacturing overhead
variance analysis, Two-Varianceoverhead analysis, Three-Variance overhead analysis,
Comparison of standard cost variances for differenttypes of variable mfg costs,
Journal entries for standard manufacturing overhead.
Learning Outcomes
1. Prepare a flexible budget and discuss how it is used
2. Discuss how standard manufacturing overhead is applied to the products produced.
3. Determine how a manufacturing overhead flexible budget is developed based on some
measure of standard production activity.
4. Evaluate how the choice of a production activity level affects the predetermined
overhead rate.
5. Distinguish between the four definitions of production capacity
6. Evaluate how the choice of a production activity level affects the predetermined
overhead rate.
7. Distinguish between the four definitions of production capacity.
8. Account for Over or Under applied manufacturing overhead.
9. Compute and evaluate standard manufacturing overhead cost variances with the two-
variance and three-variance methods.
10. Prepare journal entries to record manufacturing overhead cost variances in general
ledger accounts.
11. Recognize how standard cost variances are presented in an income statement used for
internal reporting.
Pedagogy

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2
8
Profit Variance Analysis
General approach to profit variance analysis, Contribution Margin Variance Analysis – Single
Product, Sales volume, selling price, variable cost variances with single product, Contribution
Margin Variance Analysis – Multiple Products, Sales mix variance with multiple products, Sales
volume variance with multiple products, Selling price variance with multiple products,
Contribution margin Variance Analysis with Standard Costs.
Learning Outcomes:
1. Discuss the nature and importance of profit variance analysis
2. Identify the major sources of a profit variance
3. Realize why variable costs and fixed costs should be separated in profit variance
analysis.
4. Describe how contribution margin variance analysis is performed with a single
product
5. Distinguish between a sales volume variance, a selling price variance, and a variable
cost variance.
6. Consider a sales mix variance while performing contribution margin variance analysis
with more than one product.
7. Combine contribution margin variances with standard cost variances to inform
managers about the different sources of deviations from a planned profit performance.
Pedagogy
2
9-
3
0
Final Exam
Students will be tested on their conceptual and applicative grasp of ALL the
principles of cost accounting taught. The three hour test should be prepared
focusing sharply on the learning outcomes detailed above.
4. Teaching and learning methods
The course is highly interactive between the class and the instructor. Through problems, and
specific experiential class room activities, students willhave the opportunity touse the concepts,
ideas, and strategies presented in class. Problem-solving sessions occur in both individual
(primarily) and team (occasionally) settings.
This introductory undergraduate course will incorporate a lecture and project-based approach
to the cost accounting. The Students are encouraged to read and inculcate the major principles
found in the textbook.
Teaching Methodologies

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 Lectures
 Problem Solving
 Case Study
 Class Discussions
 Student’s Participations
 Feedback from Students
 Presentations
 Data Analysis
 Quizzes and class assignments
5. Student assessment methods
Rubrics for Marking
Criteria Advanced Proficient Basic Minimal
Conceptual
understanding
Demonstrates a
clear and deep
understanding of
theory and
concepts.
Demonstrates a
clear
understanding of
theory and
concepts.
Demonstrates
limited/surface
understanding
of the theory
and concepts.
Inadequate
knowledge of
theory and
generally faces
problems in
understanding the
concepts of cost
accounting.
Identifies
issues/problems
Demonstrates a
clear and deep
understanding of
an issue/problem
in the question
Demonstrates a
good
understanding of
a problem and
use of costs in
operational
planning process.
Demonstrates a
little
understanding of
a problem and
use of costs in
operational
planning process.
Demonstrate
superficial
understanding of
an issue/problem in
the question.
Decision
Making
Demonstrate a
clear and deep
Understanding
of techniques of
differential
analysis.
Demonstrate a
clear
understanding of
techniques of
differential
analysis.
Demonstrate a
little
understanding of
techniques of
differential
analysis
Demonstrate
superficial
understanding of
techniques of
differential
analysis
Problem
Solving
Always finds a
number of ways
to solve the
problem on own
initiative
Frequently seeks
out other ways to
solve the
problem, and
rarely needs
support or
guidance
Usually seeks
out other ways to
solve the
problem, but
occasionally
needs support or
guidance
Rarely seeks out
other ways to solve
the problem and
frequently needs
support and
guidance

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Personal
Management
Always
demonstrates
personal
management
skills, and is
eager to learn
Frequently
demonstrates
personal
management
skills
Usually
demonstrates
personal
management
skills
Rarely
demonstrates
personal
management skills
Team work Always
demonstrates
effective
teamwork skills
and often takes
initiative in a
group setting
that exceeds
required skills
Frequently
demonstrates
effective
teamwork skills
and rarely needs
support or
guidance in
teamwork
activities
Usually
demonstrates
effective
teamwork skills,
and occasionally
needs support or
guidance
Rarely
demonstrates
effective teamwork
skills, and
frequently needs
support and
guidance. Often
wants to work
independently
Assessment methods … to access Weight age
1 Quizzes Knowledge and understanding 15 %
2 Assignments Knowledge and understanding 10%
3 Class Attendance Regulatory 5%
4 1st Mid Term test Knowledge and understanding 15%
5 2nd Mid Term test Professional skills 15%
6 Final exam Professional skills 40%
Total 100%
6. List of References:
Prescribed Book
1. Cost Accounting: a managerial emphasis (12th Edition)
By: Charles T. Horngren, Srikant M. Datar, George Foster
2. Managerial Accounting (2nd Edition)
By: John G.Helmkamp
Recommended Books:
1. Cost Accounting (7th edition)
By: Adolph Matz and Milton F. Usry
2. Managerial Accounting ( Fourth Edition) By: Ronald W. Hilton
7. Facilities required for teaching and learning

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 Spacious class rooms
 Double board in the class room
 Classroom multimedia with full sound system
 Classroom overhead projector
 Access to a corporation for the term research project
 Clock on back and front class wall
Room #
E-mail:
Head of Department Dean
Date: / / Date: / /

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