COMSATS UNIVERSITY, ISLAMABAD

DEPARTMENT OF MANAGEMENT SCIENCES

BACHELOR OF ACCOUNTING AND FINANCE BAF-3-A&B

COURSE
OUTLINE

COST & MANAGEMENT ACCOUNTING

Instructor: Dr. HAFIZ MUHAMMAD ISHAQ

Instructor's email: [email protected]
[email protected]
Organization

This is a three credit-hour course.  The time demands of this class are similar to an on-
campus class.  You would normally spend 3 hours per week in a classroom (plus commuting
time and "waiting" time) and 8-10 hours on homework.  That's roughly 12 to 17 hours a week for
a traditional class.  However, an investment of only 10 to 12 hours per week should be adequate
to do well in this class.   I encourage you to do ALL the assignments, preferably in the order
given.  We will cover one or two topics each week.

Course Description

The student will obtain a general understanding of the differences between management,
cost and financial accounting. The emphasis will be placed on management, or better managerial
accounting. As a result, the student will become familiar with the different type of costs,
standardized cost, budgets, methods, and tools used to control cost. 

This course explores essential cost accounting principles and procedures. A major goal to
set for you in the course is to understand and be able to apply common accounting techniques
used in business for planning, analyzing revenue and cost information, and making decisions
regarding operations and important assets. Procedures to be studied range from accounting for
daily operations to cost management reporting. They encompass capital and both short-term and
long-term capital project analysis. Topics will include manufacturing and responsibility
accounting, budgeting, job cost and process cost accounting, development and use of standard
costs, and cost-volume-profit analysis.
 
You will also explore various aspects of corporate managerial accounting to understand
the financial decision-making process. A major goal of the course is to present cost accounting
processes, procedures, terminology, concepts, and management cases to prepare you to analyze
and effectively solve cost accounting problems. Another goal is to observe and examine the
application of these skills in real-world business situations involving appropriate technological,
ethical, or international management aspects.

Core abilities developed in this course:

This course should help you:
1. Prepare neat, organized work output.
2. Practice critical thinking.
3. Manage projects individually or in groups.
Overall Course Objectives

1. Upon completion of this course, the student will be able to:

2. Distinguish between financial accounting and management accounting and identify the
major components of a management control system. Differentiate between the different
manufacturing costs.
3. Calculate breakeven point and target operating income using cost-volume-profit analysis.
4. Demonstrate the job-order costing system for accounting for costs in a manufacturing
company as well as a service company.
5. Compare and contrast job-order costing, process costing and activity-based accounting
systems.
6. Demonstrate process costing using both the weighted average and first-in, first-out
(FIFO) methods.
7. Calculate the effects of spoilage, reworked units and scrap.
8. Compare and contrast different hybrid costing systems, including just-in-time (JIT),
operation costing and back flush costing.
9. Assess the benefits derived by the organization from budgeting systems.
10. Prepare the supporting schedules and main statements for a master budget.
11. Distinguish between static budgets and flexible budgets.
12. Calculate price, efficiency and overhead variances.
13. Analyze the differences in operating income under absorption costing and variable
costing.
14. Describe the five-step sequence in a decision process.
Describe the purpose of cost allocations and examine the different methods.

Homework Assignments:

Homework assignments are designed to help you learn the mechanics of the methods
discussed in class and to give you an opportunity to apply these concepts in a straightforward
manner. In addition to their value as learning exercises, doing a careful and thorough job on the
homework assignments is the best preparation for the midterm exam. Homework assignments
should be done individually.

Assessment

Assessment is continuous and is designed to assess your knowledge and reinforce

learning objectives at critical points in the course. Additionally, the development of
communication and teamwork skills is emphasized through the alternative forms of assessment.
Details are as follows.

S.No. Assessment Items %age

1 First Sessional 10%
2 Second Sessional 15%
3 Final Exam 50%
4 Assignment/Quizzes 25%
Exams

There will be two Sessional exams and a final examination over the course of the
semester. Exams will consist of problems to be solved, or could be short essay-type
discussion questions and multiple choice or other short answer-type questions. The final
examination is comprehensive covering the entire course content. The final will be a 3-
hour exam and will be given at the Institute-assigned time.

No make-ups will be given for quizzes or exams after the specified class period. If
you will be away from campus on Institute on the day of a scheduled exam or quiz, it is
your responsibility to schedule a time to take the exam or quiz before you leave. If your
absence is not officially excused, you will be assigned a grade of zero.

Exam Notes

 A 60-minutes Sessional exams based on the topics covered in lectures.

 The final exam will be a three hour paper
 Given that a financial calculator is mandatory, there is no sharing of calculators.
 Any sharing of calculators during the exam will be considered cheating.
 Formulae sheets are provided during the exam if required.

Attendance

Students are expected to attend all classes. Your learning and your grade depend upon
your regular attendance. Students are expected to attend the section, for which they are enrolled,
except on an occasional basis as approved in advance by the Teacher. The Institute officially
excused absences will be honored, of course, but if you know in advance about a valid reason for
missing class, the teacher should be notified. Please note the official policy of the Institute
regarding attendance. Students should make every effort to be in class on time. There may be
cases when a student comes to class late, but such circumstances should not be chronic, and
should be discussed with the Teacher. If it is necessary to be late, the student should use common
courtesy and quietly take a seat as close to the door as possible.

Student Participation

Business classes require active learning. Everyone in the class is encouraged to express
him/herself and ask questions and will be given adequate opportunities to do so over the course
of the semester in this class. A good class will have as much give and take between the students
and the teacher as time will permit. If the student still has questions after class, he or she should
see the teacher after class.

Class Preparation

Reading material and/or assigned problems for a particular class period should be
reviewed prior to class in order to get the most out of class time. Assignments are to be
completed before the class on the day they are due. Late papers are not acceptable. Students are
also encouraged to take the initiative to review some of the leading business periodicals for
material related to the various course topics (see, e.g., Wall Street Journal, Business Week,
Fortune).

LECTURES

Consistent with the course objectives, lectures will address learning objectives associated
with weekly topics (as outlined in the schedule below), including basic principles and working
examples. While lectures will closely parallel material contained in assigned readings, they are
not substitutes. In particular, lectures will clarify, expand and where necessary, update material
contained in assigned readings.

COURSE CONTENTS

1st Week
Management, The Controller and Objectives
 Learning Objectives, Management, Planning, Organizing, Controlling
 The Controller participation in planning and control
 The cost department
 The roll of cost accounting
2 Week
nd

Costs: Concepts, and Cost Accounting Information System

 The concept ‘cost’
 Uses of cost data
 Cost data: Importance of past present future
 Classification of costs
 Factors influencing responsible cost control
3rd Week
Cost Systems and Cost Accumulation
 Flow of production costs
 Reporting the results of operations
 Cost systems, cost accumulation
th
4 Week
Job Order Costing
 Overview of job order costing
 Accounting for materials, accounting for labor
 Accounting for factory overhead
5 & 6th Week
th

Processing costing: Cost of Production Report; Lost Unit Calculations

 Characteristics and procedures of process costing
 Costing by departments
 Product flow
 Procedure for materials, labor, and factory
 Overhead costs
 The cost of production report
7th & 8th Week
Controlling and Costing Materials
 Procedure for materials
 Procurement and use
 Materials closing methods
 Cost of materials in inventory at the end of the period
 Costing procedures for scrap, spoiled goods, and defective work
 Summary of materials management

Mid-Term Exam

9th & 10th & Week

Controlling and Accounting for Labor Costs
 Basis for labor cost control
 Productivity and efficiency
 Measurement and labor costs
 Labor performance reports
 The computer’s contribution to labor cost control
 Productivity, inflation, and prices
 Organization for labor cost control
 Procedures for labor costing
 Computerized payroll procedures
 Incentive wage plans
 Wage incentive time
 Standards via learning
 Curve theory
 Union contracts
11th Week
Factory Overhead: Planned, Applied and Actual with variance analysis
 Factory overhead_ predetermined
 Factory overhead_ actual
 Factory overhead_ applied, over or under applied, and variance analysis
 Incorrect overhead rates
 Changing overhead rates
 Graphic: presentation of factory overhead
12th and 13th Week
Factory Overhead: Departmentalization for Product Costing and Cost Control
 The concept of Departmentalization
 Producing and service departments
 Direct departmental expenses in producing and service departments
 Indirect departmental expenses
 Establishing departmental overhead rates
 Use of departmental factory overhead rates
 Actual factory overhead departmentalized
 Over or under applied factory overhead
 Spending and idle capacity variance analysis
 Overhead departmentalization non manufacturing business and non profit organization
14th & 15th Week
Budgeting: Profits, Sales, Costs and Expenses
 Profit planning
  Principles of budgeting
16th Week
Budgeting
 Cash budget
 Planning and budgeting for manufacturing business
Recommended Text

Cost Accounting (14th) Edition, Matz Usry