Contents
PAGE
About the author
I-5
Acknowledgement
I-7
Preface
I-9
Chapter-heads
I-11
1
MARGINAL COSTING AND DECISION MAKING-I
COST VOLUME PROFIT ANALYSIS
1.1
Concept
1.1
1.1-1
Assumptions of Cost-Volume-Profit Analysis
1.1
1.1-2
Margin of Safety
1.2
1.2
Introductory problems
1.3
Multiple products
1.19
1.4
Semi-fixed and semi-variable costs
1.23
1.5
Cost indifference point
1.37
1.6
Breakeven charts
1.40
1.6-1
1.41
1.7
1.4
Angle of Incidence
Profit Volume Charts
1.42
1.43
THEORETICAL QUESTIONS
2
MARGINAL COSTING AND DECISION MAKING-II
RELEVANT COSTING
2.1
Concept of relevancy
2.1
2.2
Sunk costs
2.2
I-13
CONTENTS
I-14
PAGE
2.3
Three aspects of decision making problems
2.3
2.3-1
Management Information System Aspect
2.3
2.3-2
Fixed Cost Aspect
2.4
2.3-3
Opportunity Cost Aspect
2.5
2.4
Incremental/differential costing
2.6
2.5
Introductory decision making problems
2.6
2.6
Discontinuance of product
2.17
2.6-1
Shut Down Point
2.22
2.6-2
Closing Down
2.28
2.7
One input as key factor
2.29
2.8
Multiple key factors
2.42
2.9
Purchase v/s manufacture
2.44
2.10
Opportunity cost
2.58
2.11
Allocation of joint cost among joint products
2.70
2.12
Decision-making under uncertainty
2.74
2.13
General problems
2.77
2.99
THEORETICAL QUESTIONS
3
VARIABLE COSTING V/S ABSORPTION COSTING
3.1
Concept
3.1
THEORETICAL QUESTION
3.16
APPENDIX : COST CONTROL ACCOUNTS
3.16
4
STANDARD COSTING AND BALANCED SCORECARD
STANDARD COSTING
4.1
Concept
4.1
4.1-1
Material Cost Variance
4.1-2
Labour Cost Variance
4.13
4.1-3
VO Cost Variance
4.18
4.1-4
FO Cost Variance
4.22
4.1-5
Interdependence of Variances
4.30
4.1-6
Sales Variances
4.31
4.1-7
Reconciling Budgeted Profit with Actual Profit
4.40
4.1-8
Reconciling Standard Profit with Actual Profit
4.54
4.1-9
Single Plan v/s Partial Plan
4.55
4.1-10
Ratios in Standard Costing
4.70
4.1-11
Joint-Products & By-Products
4.72
4.6
CONTENTS
I-15
PAGE
4.1-12
Revision Variance
4.75
4.1-13
Investigation of Variances
4.83
4.1-14
Output Method for Variable Overheads
4.83
4.1-15
Output Method for Fixed Overheads
4.84
BALANCED SCORE CARD
4.2
Concept
4.85
4.2-1
The Four Perspectives
4.85
4.2-2
Balance Score Card - As a Tree
4.86
4.2-3
Analysis of Operating Income for Balanced Score Card
4.87
4.91
THEORETICAL QUESTIONS
5
BUDGETARY CONTROL
5.1
Process of budgeting
5.2
Flexible budgeting
5.18
5.3
Conflicting roles in budgeting
5.41
5.4
Performance budgeting
5.42
5.5
Zero base budgeting (ZBB)
5.42
5.5-1
Characteristics of ZBB
5.42
5.5-2
Process of ZBB
5.42
5.5-3
Advantages of ZBB
5.43
5.5-4
Limitations of ZBB
5.43
5.5-5
Superiority of ZBB
5.43
5.5-6
ZBB and Productivity Improvements
5.43
5.1
5.44
THEORETICAL QUESTIONS
6
ACTIVITY-BASED COSTING
6.1
Concept
6.1
6.2
Value-added and non-value-added activities
6.2
6.3
Four different categories of activities
6.3
6.4
Need for emergence of activity based costing
6.31
6.5
Corporate strategy and ABC
6.32
6.6
Difference between ABC system and traditional costing system
6.32
6.7
ABC for highly automated plants
6.33
THEORETICAL QUESTIONS
6.33
CONTENTS
7
I-16
PAGE
SERVICE-SECTOR COSTING
7.1
Concept
7.1
7.1-1
Special Features of Service Sector Costing
7.33
7.1-2
Methods of Costing in Service Sector
7.34
7.2
Activity based costing (ABC) in service sector
7.34
7.3
Customer costing
7.35
7.4
Direct product profitability
7.35
7.36
THEORETICAL QUESTIONS
8
PRICING
8.1
Concept
8.1
8.2
Minimum price
8.2
8.3
Regular price or cost plus price
8.11
8.4
General problems
8.21
8.5
General guidelines
8.29
8.6
Pricing strategies
8.29
8.6-1
Penetration Pricing
8.29
8.6-2
Price Skimming
8.30
8.6-3
Price Discrimination
8.30
8.7
Service Sector Pricing
8.30
8.8
Pareto Analysis
8.31
8.9
Selling below marginal cost
8.32
8.33
THEORETICAL QUESTIONS
9
TRANSFER PRICING
9.1
Concept
9.1
9.2
Objectives of transfer pricing
9.1
9.3
Methods
9.2
9.3-1
Cost based Methods
9.2
9.3-2
Market Price based methods
9.2
9.3-3
Profit shared method/contribution shared method
9.2
9.3-4
Negotiated price method
9.2
THEORETICAL QUESTIONS
9.39
CONTENTS
I-17
10
PAGE
TARGET COSTING
10.1
Concept
10.2
Target costing principles
10.14
10.2-1
10.15
10.1
Requirement of Market Research
10.3
Benefits of target costing
10.15
10.4
Steps of target costing
10.16
10.5
Controlling the costs and pricing of the products
10.16
10.6
Fostering team work
10.17
10.17
THEORETICAL QUESTIONS
11
THE THEORY OF CONSTRAINTS
11.1
Concept
11.1
11.2
Throughput accounting (also referred as Throughput Costing)
11.3
11.3
Three measurements of TOC
11.14
11.4
Synchronous manufacturing
11.14
Theoretical Questions
11.15
12
JUST - IN - TIME AND BACKFLUSH COSTING
12.1
JIT
12.1
12.1-1
JIT Purchasing
12.1
12.1-2
JIT Production
12.2
12.2
Backflush costing
12.3
Competitive environment
12.16
12.4
Profitability
12.17
12.5
Eliminating wastage of resources
12.17
12.6
Impact on overheads
12.17
12.7
Kanban
12.18
12.6
12.18
THEORETICAL QUESTIONS
13
TOTAL QUALITY MANAGEMENT
13.1
Concept
13.1
13.2
Advantages/benefits
13.1
13.3
Six Cs of TQM
13.2
13.3-1
13.2
13.4
Four Ps of Quality Improvement Principles
Quality costs
13.2
CONTENTS
I-18
PAGE
13.5
Critical success factors for the implementation of TQM
13.18
13.6
Value additions
13.18
13.7
P.R.A.I.S.E.
13.19
13.19
THEORETICAL QUESTIONS
14
LIFE CYCLE COSTING
14.1
Concept
14.1
14.1-1
Total Cost of Ownership
14.1
14.1-2
Product Life Cycle Costing
14.1
14.2
Stages of Life Cycle
14.3
Essential features of life cycle costing
14.15
14.4
Benefits/importance
14.16
14.5
Structural and executional cost drivers
14.16
14.2
14.16
THEORETICAL QUESTIONS
15
THEORETICAL ASPECTS
VALUE CHAIN ANALYSIS
15.1
Concept
15.1
15.1-1
Grouping of Activities
15.2
15.1-2
Assessing the Competitive Advantage
15.3
15.1-3
Strategic Framework
15.3
15.1-4
Importance for Cost Management
15.4
15.1-5
Cost Reduction
15.4
UNIFORM COSTING
15.2
Concept
15.8
15.2-1
Advantages of Uniform Costing
15.8
15.2-2
Essential Requisites for Installation
15.9
VALUE ENGINEERING
15.3
Concept
15.9
COST PLUS CONTRACTS
15.4
Concept
15.11
15.4-1
Advantages
15.11
15.4-2
Disadvantages
15.11
BENCHMARKING
15.5
Concept
15.5-1
15.12
The Benchmarking Process
15.12
CONTENTS
I-19
PAGE
15.5-2
Prerequisites for Effective Benchmarking
15.13
15.5-3
Types of Benchmarking
15.13
15.5-4
Limitation
15.14
15.5-5
Benchmarking Code of Conduct
15.14
MRP
15.6
Concept
15.15
15.6-1
Two Plans of MRP
15.15
15.6-2
Objectives of MRP
15.15
15.6-3
Requirements/Input/Data Requirement of MRP
15.15
15.6-4
Prerequisites for Successful Operation
15.16
15.6-5
Benefits
15.16
ENTERPRISE RESOURCES PLANNING
15.7
Concept
15.17
15.7-1
Features
15.18
15.7-2
Benefits of ERP
15.19
15.7-3
Limitations of ERP
15.19
GENERAL TOPICS
15.8
15.9
Operational Database
15.20
15.8-1
15.20
Routinely Recorded Data
Disinvestment
15.21
15.10 Qualitative factors affecting outsourcing decisions
15.22
15.11 Changing manufacturing costs
15.22
15.12 Inventory holding during inflationary conditions
15.23