What is Cost Accounting and Its Purpose?
Cost Accounting provides the detailed information that management needs to control current operations and plan for the future.
Why Is Cost Accounting Important?
Management uses this information to decide how to allocate resources to the most efficient and profitable areas of the business.
What Will You Learn in this Cost Accounting Class?
In Module One, you will learn the uses of cost accounting information, the ethical responsibilities and certification requirements for management accountants, as well as corporate governance, the relationship of cost accounting to financial and management accounting, and the three basic elements of manufacturing costs.
In Module Two, you will learn to recognize the two basic aspects of materials control, to specify internal control for materials, to account for materials and relate materials accounting to the general ledger, to account for inventories in a just-in-time (lean production) system, and to account for scrap materials, spoiled goods, and defective work.
In Module Three, you will learn to distinguish between the features of hourly rate and piece-rate plans, to specify procedures for controlling labor costs, account for labor costs and payroll taxes, to prepare accruals for payroll earnings and taxes, and to account for special problems in labor costing.
In Module Four, you will learn to identify cost behavior patterns, separate semi-variable costs into variable and fixed components, to prepare a budget for factory overhead costs, to account for actual factory overhead, to distribute service department factory overhead costs to production departments, to apply factory overhead using predetermined rates, and to account for actual and applied factory overhead.
In Module Five, you will learn to recognize the differences between job order and process cost accounting systems, to compute unit costs in a process cost system, to assign costs to inventories using equivalent units of production with the average cost method, and to prepare a cost of production summary and journal entries.
In Module Six, you will learn to compute unit costs when materials are not added uniformly throughout the process, to account for units lost in the production process, account for units gained in the production process, to assign costs to inventories, using the first-in, first-out method, and to identify the methods used to apportion joint costs products and account for by-products.
In Module Seven, you will learn to explain the general principles involved in the budgeting process, to identify and prepare the components of the master budget, to identify and prepare components of the flexible budget, and to explain the procedures to determine standard amounts of factory overhead at different levels of production.
In Module Eight, you will learn to describe the different standards used in determining standard costs, to determine procedures for recording standard costs, to compute and analyze variances, to prepare journal entries to record variances, to examine and interpret variances, to recognize the features of a standard cost system, to account for standard costs in a departmentalized factory, to distinguish between actual and applied factory overhead, to compute variances using the two-variance method, to compute variances using the four-variance method, and to compute variances using the three-variance method.
In Module Nine, you will learn to perform job-order costing for service businesses, to prepare budgets for service businesses, to apply activity-based costing for a service firm, to compare the results of cost allocations using simplified costing versus activity based costing, to prepare a balanced score-card for various business entities, and to determine the cost of quality.
In Module Ten, you will learn to compute net income under variable and absorption costing, to discuss the merits and limitations of variable costing, to define segment profitability and distinguish between direct and indirect costs, to compute the break-even point and the target volume needed to earn a certain profit, to calculate the contribution margin ratio and the margin of safety ratio, to discuss the impact of income tax on break-even computations, to use differential analysis to make special decisions. and to identify techniques for analyzing and controlling distribution costs.