Cost and Management Accounting PPT
Transcript of Cost and Management Accounting PPT
![Page 1: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/1.jpg)
Prof. A. Damani, FCA,MBA,Mcom,SET
1
Cost and Management Accounting
• Course = MMS/PGDM • Marks = 60+40 (2 tests+1 ppt)• Duration = 3 Hours per session• No. of Session = 15
• References: Cost and Management Accounting by:• Khan and Jain• T. Ghosh • Shukla Grewal• Horngreen
![Page 2: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/2.jpg)
Introduction …………….
• Business Accounting System consists of three parts :
• Financial Accounting
• Cost Accounting and
• Management Accounting
![Page 3: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/3.jpg)
• The information generated from these systems are used for
• planning
• implementation and
• control
![Page 4: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/4.jpg)
• Accounting information- analysis
• Management Accounting-decision making
• Cost accounting – control and reduction of costs.
![Page 5: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/5.jpg)
Tools of Management accounting– Financial Accounting– Cost Accounting– Statistical Techniques– Inflation Accounting– Taxation Tools of Financial Analysis
Cash flow and funds flow statements , Ratio analysis, Trend Analysis etc.
![Page 6: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/6.jpg)
Methods of costing- for recording and identifying costs
– Unit / Direct costing– Absorption costing– Process costing– Job costing– Contract costing– Variable costing
![Page 7: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/7.jpg)
Techniques of costing- for analyzing costs
• Marginal costing
• Standard costing
• Activity based costing
• Cost Volume profit Analysis
• Cost control and cost management
![Page 8: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/8.jpg)
Classification of costs
• Costs can be classified on the following basis:• Nature of element• Functions• Identifiabiltiy• Variability• Controllability• Normality• Financial accounting treatment• Time• Association with product• Planning and control
![Page 9: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/9.jpg)
Nature of element
• Materials
• Labour
• Overheads
![Page 10: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/10.jpg)
Functions
• Manufacturing/Production costs – all costs from time of procuring materials to conversion into finished goods
• Administrative costs
• Selling and distribution costs
![Page 11: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/11.jpg)
Identifiabiltiy
• Direct costs
• Indirect costs
![Page 12: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/12.jpg)
Variability
• Fixed costs
• Variable costs
• Semi variable costs
![Page 13: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/13.jpg)
Controllability
• Controllable costs
• Uncontrollable costs
![Page 14: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/14.jpg)
Normality
• Normal costs
• Abnormal costs
![Page 15: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/15.jpg)
Treatment in Financial accounting
• Capital
• Revenue
![Page 16: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/16.jpg)
TIME
• Historical costs – can be identified only after they are incurred and recorded. They may vary from company to company. It depends on the amount recorded
• E.g. a machine purchase domestically and imported will have different costs.
• Predetermined costs: known in advance. • E.g. manufacturing costs of a shirt from a process will
remain the same.
![Page 17: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/17.jpg)
Association with product
• Product costs – total costs associated with a single unit. Sum of direct and indirect costs
• Period costs – pertaining to a particular period than to production.
• E.g. salary of accountant, rent paid, etc.
![Page 18: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/18.jpg)
Planning and control
• Budgeted costs - estimated
• Standard costs – as per industry
![Page 19: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/19.jpg)
Important terms for Decision-making
• Marginal costs – costs to manufacture one additional unit
• Differential costs: change in costs due to change in level of activity/output
• Sunk cost
• Notional/Imputed costs – no third party cash outflow. E.g salary to proprietor, rent on proprietors own property, etc.
• Opportunity costs
• Replacement costs – cost of replacing an asset in its present condition
• Avoidable costs & Unavoidable costs – e.g. product is discontinued
• Future costs
• Joint costs
• Discretionary costs – whose contribution to revenue or profit cannot be conclusively identified. E.g. how much has advertisement costs contributed to sales.
• Committed costs: are those which the business has committed due to decisions and actions taken by management in past. E.g. Depreciation. Advance Income tax paid, Rent contract, etc.
![Page 20: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/20.jpg)
• Marginal costs – costs to manufacture one additional unit• Differential costs: change in costs due to change in level of activity/output• Sunk cost• Notional/Imputed costs – no third party cash outflow. E.g salary to proprietor, rent
on proprietors own property, etc.• Opportunity costs• Replacement costs – cost of replacing an asset in its present condition• Avoidable costs & Unavoidable costs – e.g. product is discontinued• Future costs• Joint costs• Discretionary costs – whose contribution to revenue or profit cannot be
conclusively identified. E.g. how much has advertisement costs contributed to sales.
• Committed costs: are those which the business has committed due to decisions and actions taken by management in past. E.g. Depreciation. Advance Income tax paid, Rent contract, etc.
![Page 21: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/21.jpg)
Presentation topics (from session 2) – see Guidelines on next slides
• Group 1: Transfer pricing• Group 2: Operating costing/costing of service sector• Group 3: Joint product and By-product• Group 4: Variance costing• Group 5: Target costing and life cycle costing• Group 6: Process costing• Group 7: Key factor analysis in marginal costing• Group 8: Integrated and non-integrated costing• Group 9 JIT, Material requirement planning• Group 10: Responsibility accounting
![Page 22: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/22.jpg)
Presentation guidelines
• Total duration of presentation EXACT 25 minutes. Please rehearse for time.
• 5 minutes for Q&A• 14 slides ONLY• 1st slide – team members and title• Last slide – Academic references• ONLY 7 lines in each slide• ONLY 7-9 words in each line• Include practical examples if required (can exceed lines
and words)
![Page 23: Cost and Management Accounting PPT](https://reader034.fdocuments.us/reader034/viewer/2022050615/54722c72b4af9f61218b45a0/html5/thumbnails/23.jpg)
Cost sheet format
• Format hyperlink
• Cost sheet format.xls
• (open hyperlink command)