ACC205:COST AND MANAGEMENT ACCOUNTING

Course Outcomes: Through this course students should be able to

CO1 :: classify various techniques of inventory control and methods of pricing material issue

CO2 :: apply the concepts of marginal costing for decision making

CO3 :: use the various cost accounting techniques in rational decision making

CO4 :: employ the understanding of cost concepts to work analytically with cost data

CO5 :: use ratio analysis to evaluate the liquidity, activity, profitability and solvency position of
the organization
CO6 :: prepare cash, flexible, sales and production budgets for smooth functioning of the
activities in the organizations

Unit I
Introduction to Cost Accounting : meaning,objectives and importance of Cost
Accounting,differentiation between Cost and Financial Accounting, ways of classifying costs, Unit or
Output Costing, Cost Sheet preparation
Material Costing : meaning, objectives and essential requirements of inventory control, material
classification, techniques of Inventory Control: ABC Technique,VED analysis and Inventory levels
(minimum,maximum and reorder levels) and Economic Order Quantity (EOQ), different methods of
pricing material issues (FIFO, LIFO and Simple Average method)
Unit II
Marginal Costing and CVP Analysis : concept, nature and importance of Marginal Costing, CVP
Analysis: P/V ratio, Break even point, Margin of Safety, applications of Marginal Costing for decision
making in organizations: make or buy decisions and product mix decision
Unit III
Standard Costing : conceptual framework of Standard Costing: concept, applicability,preliminaries in
establishing a system of Standard Costing and advantages and limitations of Standard Costing,
Variance Analysis: Material Variances and Labour Variances
Unit IV
Introduction to Management Accounting : meaning, nature, use and limitations of management
accounting, comparison between Cost, Management and Financial Accounting
Analysis of Financial Statements : components, significance and purpose of Financial Statement
Analysis, tools for analysing Financial Statements: Comparative Statement Analysis and Common Size
Statement Analysis.
Unit V
Ratio Analysis : nature, importance and limitations of Ratio Analysis, types of Ratios: Liquidity
Ratios, Activity Ratios, Profitability Ratios and Solvency Ratios
Unit VI
Cash Flow Statement Analysis : objectives, uses and components of Cash Flow Statement,
preparation of Cash Flow Statement(Indirect method: AS-3 revised)
Budgetary Control : objectives and limitations of Budgetary Control, classification of Budgets,
preparation of Cash Budget and Flexible Budget

Text Books:
1. COST AND MANAGEMENT ACCOUNTING by M N ARORA, HIMALAYA PUBLISHING HOUSE
PVT. LTD
References:
1. MANAGEMENT ACCOUNTING by PARESH SHAH, OXFORD & IBH

2. COST ACCOUNTING- A MANAGERIAL EMPHASIS by CHARLES T. HORNGREN, SRIKANT M.

DATAR, GEORGE FOSTER, MADHAV V. RAJAN, CHRISTOPHER ITTNER, PEARSON
3. MANAGEMENT ACCOUNTING by DEBARSHI BHATTACHARYYA, PEARSON

4. COST ACCOUNTING by JAWAHAR LAL AND SEEMA SRIVASTAVA, M.G.Hills

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