Ahsanullah University of Science and Technology School of Business Course outline for Fall, 2020 Course Code: BBA 311 Course Title: Cost and Management Accounting Credit Hours: 4 (Four) Course Teacher: Dr. SM Shafiul Alam, Professor Course Objectives This course has been designed to provide understanding of the means by which management accounting professionals can offer pertinent information regarding decision making while managing the organization effectively and efficiently. After completing the course the students are expected to interpret variety of costing techniques suitable for different actions and decisions; formulate and utilize budgets for planning and controlling; evaluate operational performance; comprehend behavioral effects in relation to performance measurement tools. Learning Outcomes By the end of this course it is expected that the student will be able to: explain the different cost accounting systems and how they account for product costs; relate revenue and cost management concepts and techniques to particular types of organization structures; identify appropriate information for planning and decision making; explain and apply management control techniques in organizations. . Course Content: Cost and Management Accounting: Information for Decision Making Definition of Cost Accounting, Comparison of Cost Accounting and Financial Accounting; The role of Cost Accounting; Cost Data for Management Purposes; Methods and Techniques of Cost Accounting; Characteristics of an Ideal Cost Accounting System; Installation of a Cost Accounting System; Modern Trends in Cost Accounting. Cost Concepts and Behavior Cost Object; Expenditures, Cost, Expense and Loss; Cost Classifications; Cost Data and Uses; The Chart of Accounts; Statement of Cost of Goods Manufactured and Sold; Income Statement. Job Costing Model Job Order Costing; Job Order Cost System-Illustrated; Spoiled Goods; Defective Goods; Scrap materials and Waste Materials in a Job order Cost System. Process Costing Model (selective coverage) Process Costing Defined; Objective of Process Cost System; Characteristics of a Process Cost System; Comparison of Job Order and Process Cost Accumulation System; Production by Department; System Flow; Determination of Equivalent Units; The Cost of Production Report. Costing and Control of Manufacturing Overhead Manufacturing Overhead Costs; Actual Vs. Normal Costing of Manufacturing Overhead; Production Capacity, Predetermined Overhead Rates; Departmental vs. Plant-wise Overhead Rates; Separating Mixed Costs. Scatter-graph; High-low Method and Regression Analysis; Accounting for Manufacturing Overhead; Analysis and Disposition of Under-applied-and Overapplied Overhead. Activity-Based Costing The Contemporary Manufacturing Environment; Limitation of Traditional Costing Systems; ABC Defined; Identifying Activities that Use Resources; Cost Drivers and Choosing Cost Drivers; Assigning Costs Using Activity-Based Costing-Benefits of ABC; Criticism of ABC; ABC and strategic Cost Management. Fundamentals of Cost-Volume-Profit Analysis Introduction, The Basics of Cost-Volume-Profit (CVP) Analysis: Contribution Margin, Contribution Margin Ratio, Applications of CVP Concepts, Importance of the Contribution Margin, Assumptions of CVP analysis, Break-Even Analysis, contribution Margin method, CVP Relationships in a Graphic Form, Target profit analysis, Margin of Safety. Profit Planning Budget; Advantages of Budgeting; Types of Budgets, Budgeted Income Statement; Budgeted Balance Sheet. Flexible Budget and Performance Analysis The Variance Analysis Cycle; Flexible Budgets; Characteristics of a Flexible Budget; Deficiencies of the Static Planning Budget; How a Flexible Budget Works; Flexible Budget Variances; Activity Variances; Revenue and Spending Variances; A Performance Report Combining Activity and Revenue and Spending Variances; Performance Reports in Nonprofit Organizations; Performance Reports in Cost Centers; Flexible Budgets with Multiple Cost Drivers Standard Costing and Performance Analysis Definition, Purpose of standard costing; Setting standard costs; Ideal versus Practical standards; Direct Materials standards; direct labor standards; Variable Manufacturing Overhead Standards; Models for variance analysis. Variable Costing and Segment Reporting Overview of Variable and Absorption Costing; Variable Costing Contribution Format Income Statement; Absorption Costing Income Statement; Reconciliation of Variable Costing with Absorption; Costing Income; Advantages of Variable Costing and the Contribution Approach; Enabling CVP Analysis; Explaining Changes in Net Operating Income; Supporting Decision Making; Segmented Income Statements and the Contribution Approach; Traceable and Common Fixed Costs and the Segment Margin; Identifying Traceable Fixed Costs; Traceable Costs Can Become Common Costs; Levels of Segmented Income Statements Segmented Income Statements – Decision Making and Break-Even Analysis; Decision Making; Break-Even Analysis Segmented Income Statements – Common Mistakes. Performance Measurement in Decentralized Organizations Decentralization in Organizations; Advantages and Disadvantages of Decentralization Responsibility Accounting; Cost, Profit, and Investment Centers; Evaluating Investment Center Performance – Return on Investment; Understanding ROI; Residual Income; Divisional Comparison and Residual Income; Operating Performance Measures; Manufacturing Cycle Efficiency (MCE); Balanced Scorecard; A Company’s Strategy and the Balanced Scorecard Recommended Text Books Garrison, Ray H. & Noreen, Eric W., Managerial Accounting, 16th Edition, McGraw-Hill Companies Inc., Boston, 2020. Horngren, CTL., Sundem, & Stratton, W.O., Stratton, Introduction to Management Accounting, Prentice-Hall of India Limited, New Delhi, 1999 Workload Workload Type Workload Description Hours Frequency Lecture Formal lectures 4.0 Every Week Home work Problems from the text 4.0 Every Week Assessment Plan Class Performance Class test (3) + Major Assignment (1) Final Examination : 10% : 20% : 70% Fraud Awareness: Students who violate University rules on academic dishonesty are subject to disciplinary penalties, including the possibility of failure in the course and/or dismissal from the University. Since dishonesty harms the individual, all students, and the integrity of the University, policies on academic dishonesty will be strictly enforced. The responsibilities students with regard to scholastic dishonesty are described in detail in the school’s Policy Statement on Academic Dishonesty.
