Tomas Del Rosario College

Capitol Drive, San Jose, Balanga City, Bataan

Telefax No.: (047)791-6152; Tel. Nos.: (047) 237-3511, 237-0841

BACHELOR OF SCIENCE IN ACCOUNTANCY

(Course Syllabus)

Course: Actg. 6

Course Title: Cost Accounting & Cost Management, Part 1

Course Credit: Three (3) units

Prerequisite: Financial Accounting & Reporting, Part I

Course Description

This course is designed to orient the students to the cost accounting and cost management framework of
business. Topics discussed are: overview of cost accounting; manufacturing cost accounting cycle;
costing methods for the new manufacturing environment such as activity-based costing, target costing,
total quality management, value reengineering, and theory of constraints. Also discussed is the impact of
environmental concerns on costs.

Course Outline:

1. Overview of cost accounting

1.1 Definition, scope, objectives of cost accounting
1.2 Relationships of cost accounting to financial and management accounting
1.3 Nature, classification and purposes of cost
1.4 Elements of product cost, flow of cost in service, trading & manufacturing businesses
2. The cost and management accounting framework
2.1 Cost and management accounting in comparison with financial accounting: their
purposes, the role of cost accounting as part of a management information system, and
the need for both financial as well as non-financial information
2.2 Cost classification concepts and terminology
2.3 The use of linear, curvilinear and step functions and how their calculations are used to
analyze cost behavior
2.4 The concepts of cost units, cost centers and profit centers
2.5 Journal entries for manufacturing operations
2.6 Preparations of cost statements (service, trading and manufacturing operations), income
statement and balance sheet
3. Cost determination: the costing of resource inputs
3.1 Materials
3.1.1 Acquisition and usage of materials
3.1.2 Accounting for stock (inventory) movements
3.1.3 Determination of optimum purchase quantities
 3.1.4 Material pricing issues
3.1.5 Identification of accounting for stock losses
3.2 Labor
3.2.1 The difference between direct and indirect labor
3.2.2 Types of labor remuneration methods
3.2.3 Labor cost incurrence and distribution
3.2.4 Labor efficiency calculations and interpretations
3.2.5 Recording labor costs
3.2.6 Calculation and interpretation of labor turnover rates
3.3 Overheads
3.3.1 Incurrence of overhead ([Items of overhead classified into fixed and
variable, methods of separating fixed from variable in a mixed cost,
Actual vs. applied overhead (using different overhead rates), Over- or
under-applied overhead recognition and disposition]
3.3.2 Overhead cost analyses
3.3.3 The apportionment and absorption of overhead costs, including reciprocal
service situations
3.3.4 Accounting for the over- and under-absorption of costs
4. Materials costing and control
4.1 Costing based on physical flow (FIFO, Average)
4.2 Traditional control procedures (Order cycling, Min-mx, Two-bin, Automatic order, ABC
plan)
4.3 Alternative stock/inventory management systems [Economic Order Quantity (TQM),
Total Quality Management, Just In Time (JIT) (backflush costing)]
4.4 Accounting and control of waste, scrap, spoiled and defective materials and goods
4.5 Cost reduction techniques (Work study, Time and motion study, Value analysis)
5. Labor costing and control
5.1 Documents and their flow in labor costing and control
5.2 Payroll preparation and distribution
5.3 Labor-related costs
6. Overhead costing and control
6.1 Selection of activity base/level
6.2 Plant-wide vs. multiple overhead rates
6.3 Separating variable from fixed in mixed costs (High-low, Scattergraph, Least squares,
Variable rate and fixed overhead rate)
6.4 Allocation of service department cost (Direct, Stepwise, Algebraic)
7. Costing methods: the costing of resource outputs
7.1 Job order cost system
7.1.1 Nature, definition and characteristics
7.1.2 Cost flow of materials, labor and overhead (Flow of documents, Journal
entries, Posting to job order cost sheets)
7.1.3 Accounting for jobs completed and sold
Suggested References
 Barfield, Raiborn, & Kinney. (2003). Cost Accounting, 5th Ed., Mandaluyong City: Mutual
Books, Inc.
 Carter and Usry. Cost Accounting, 13th Ed.
 De Leon, N. (2005). Cost Accounting. Manila: GIC Enterprises.
 Raiborn, Kinney & Kinsey, Cost Accounting, (2006), 6th Ed. Mandaluyong City: Mutual Books,
Inc., Shaw Blvd., Mandaluyong City.
 Vicente, V. V. (2003). Cost Accounting and Cost Management. Mandaluyong City: Mutual
Books, Inc.