Quaid-i-Azam School of Management Sciences,

Quaid-i-Azam University, Islamabad

Spring Semester 2012
Course:
Management Accounting
Course Code:
BA-412
Course Instructor:
Abdul Razzaq
Level:
MBA-III (B)
Course Objective: Cost accounting course concerns with fundamental
cost concepts, behavior, and analysis and the use of cost information
to develop superior decision making process and outputs. This course
introduces the production, communication, and the use of accounting
information within the context of business activities. Our financial
reporting system has changed greatly over the years and will continue
to change. The core of these changes is the accounting profession that
must provide reliable and relevant information to users. Consequently,
the course also brings in the awareness of the substance to students.

Course Outline
1. Concept of Management and Function of Controller (1st Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Identify the major differences and similarities between financial and cost accounting
Understand the role of cost accountants in an organization
Understand the basic concepts used in cost accounting e.g Material, FOH etc
Understand the importance of upholding social and ethical standards
Understand the framework for measuring and evaluating management activities.
Chapter Contents:
Management and its functions.
The framework for planning and controlling
The nature of cost accounting
Scope of cost accounting
Functions of cost accounting
2. Cost terms, Concepts and Classifications (2nd Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Identify and give examples of each of the three (Material, Labor, FOH) basic
manufacturing cost categories.
Distinguish between product and period costs
Prepare income statement and cost of goods sold statement
Prepare a schedule a cost of production
Differentiate between fixed, variable and mixed costs
Differentiate between direct and indirect costs
Classify the costs for decision making
Chapter Contents:
The concept of cost
1

Classification of the costs

o General cost classification
o Product cost Vs Period cost
o Cost classification on financial statements
o Cost classification based on behavior of the costs
o Direct Vs Indirect costs
o Cost classification for decision making
3. Job Order Costing (3rd & 4th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Distinguish between job order costing and process costing
Identify the documents that are used in job order costing
Understand the flow of costs in a job order costing system and prepare appropriate
journal entries to record costs.
Apply overhead cost to Work in Process using a predetermined overhead rate.
Prepare a schedule of cost of goods manufactured and cost of goods sold.
Use of T-Accounts to show the flow of costs in a job order costing system.
Compute over-applied and under-applied cost and prepare a journal entry to close the
balance in the manufacturing overhead to the appropriate accounts.
Chapter Contents:
Job Order Costing Vs Process Costing
Measuring direct material cost
Measuring direct labor cost
Calculation of the Predetermined overhead rates
Computation of the Unit cost
Non Manufacturing costs
Cost of Goods manufactured
Cost of goods sold.
4. Process Costing (5th & 6th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Record the flow of materials, labor and overhead through a process costing system
Compute the equivalent units of production using weighted average and FIFO method
Compute cost per equivalent unit using weighted average and FIFO method
Assign cost to units using equivalent units in weighted average and FIFO method
Chapter Contents:
Similarities between job order and process costing
Differences between job order and process costing
Cost flows in process costing
Equivalent Units of Production
5. Factory Overhead (Planned, Applied, Actual with variance analysis) (8th & 9th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Define factory overhead.
Application of the factory overhead
2

 The purpose of the applied factory overhead

The differences between actual and applied factory overhead.
Chapter Contents:
Factory overhead Predetermined
Factory overhead Actual
Factory overhead Applied
Over or under applied factory overhead and their treatment.
6. Budgeting (10th & 11th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Understand why organizations budget and the process they use to create budgets.
Prepare a sales budget, including a schedule of expected cash collections, production
budget, direct material budget, direct labor budget, manufacturing overhead budget,
selling and administrative expenses budget, cash budget, budgeted income statement
& budgeted balance sheet.
Chapter Contents:
The basic framework of budgeting
The sales budget, production budget, material purchased budget, accounts payable
budget, labor budget, manufacturing overhead budget, ending finished goods
inventory budget, selling and administrative expenses budget, cash budget, budgeted
income statement & budgeted balance sheet
7. Standard Costing (12th & 13th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Explain how direct material standards and direct labor standards are set
Compute direct material price and quantity variances and explain their significance
Compute the variable manufacturing overhead spending and efficiency variances
Chapter Contents:
Standard costs
Setting standard costs
Price and quantity variances
Direct material variances
Direct labor variances
Variable manufacturing overhead variances
Fixed overhead variances
8. Direct Costing and Contribution Margin (14th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Understand the concept of direct costing and absorption costing
Explain the facts of direct costing
Observe internal and external uses of direct costing
Describe why does the theorists exclude fixed manufacturing costs from inventories
Chapter Contents:
The concept of direct costing
Absorption costing
Internal uses of direct costing
3

 External uses of direct costing

9. Break Even and Cost Volume Profit Analysis (15th & 16th Week)
Chapter Objectives:The students who successfully complete this chapter will be able to:
Explain how changes in activity affect contribution margin and net operating income
Prepare and interpret a cost-volume-profit (CVP) graph
Use the contribution margin ratio to compute changes in the contribution and net
operating income resulting from changes in sales volume
Show effects on contribution margin of changes in variable costs, fixed costs, selling
prices and volume.
Compute the breakeven point in units sales and sales dollars
Determine the sales level needed to achieve a desired target profit
Chapter Contents:
Contribution margin
CVP relationship in graph
Breakeven analysis
Target profit analysis
10. Any Other Topic: Depending on the availability of the time and interest of the students
some other topics may also be discussed in the class and will be included in the
examination.
Text Book: Cost Accounting Planning and Control by Matz and Usury (7th Edition)
Books Recommended:

Cost Accounting by Ralph S. Polimeni, Frank J.Fabozzi and Arthur H.

Adelberg (2rd Edition)
Cost Accounting by Hilton, Horngren (12th Edition)
Cost Accounting by T. Lucy (3rd Edition)
Managerial Accounting by Garrison, Noreen, Brewer (11th Edition)
Marks Distribution:
Marks
Mid-term
30
Quizzes
15
Assignments
15
Class Participation and Attendance
15
Final examination
75
Total
150
Attendance: As per the university rule students are supposed to have a minimum of 80%
attendance out of the lectures delivered during the semester to be eligible for taking the
terminal examination. Anyone failing to have 80% attendance at the end of the semester
will not be allowed to take terminal examination.
Quizzes: To check the students understanding, normally a quiz will be taken after the
completion of topic.
Assignments: Frequent assignments will be given to the students in the form of course
work or applied to broader the vision of the students.
Mid-Term: There will be one mid-term exam that will be held in 7 th week of the
semester or as per the department instructions.

Terminal Examination: There will be an end term examination as per the date sheet.
This examination will have 50% weighted of your total semester marks and will cover all
the topics studied during the semester.
Important Note: There will be no make-ups during the semester.