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Chapter Heads 1
Cost Accounting : Systems, Objectives and Essentials
2
Cost Concepts : Terminology and Classification
3
Cost Concepts : Behaviour and Segregation
4
Direct Material : Procurement Procedures and Accounting of Issues
5
Direct Material : Stock Control Techniques
6
Direct Labour : Remuneration Systems
7
Direct Labour : Turnover and Accounting
8
Overheads : Allocation and Apportionment
9
Overheads : Absorption and Recovery
10
Overheads : Treatment of Special Items
11
Activity Based Costing : Systems and Procedures
12
Costing Methods : Output Costing, Job Costing and Batch Costing
13
Contract Costing : Running Contracts and Contracts Nearing Completion
14
Operating Costing : Application in Service Sector
1
21
44
71
111
150
197
233
278
C-9
310
333
464
383
422
15
Process Costing : Ascertainment of Cost and Profitability
16
Process Costing : Equivalent Units
17
Joint Products and By-products : Ascertainment of Cost and Profitability; Decisions on Further Processing 548
18
Reconciliation of Profit : Cost Accounts and Financial Accounts
19
Cost Book-keeping : Non-Integrated and Integrated Cost Systems
20
Break-even and Cost-Volume-Profit Analysis : In Multi Product and Uncertainty Situations
21
Marginal Costing Technique : Applications in Decision Making
22
Budgeting : Preparation of Budgets and Control of Variances
23
Standard Costing : Terminology, Variance Analysis and Investigation
24
Uniform Costing and Interfirm Comparisons
25
Cost Audit and Management Audit
26
Latest Developments in Cost Accounting
497
523
960
973
C-10
985
575
599
699
788
856
638
Contents Chapter 1
COST ACCOUNTING : SYSTEMS, OBJECTIVES AND ESSENTIALS Meaning and Terminology
2
Cost, Costing, Cost Accounting, Cost Accountancy, Cost Unit, Cost Object. Comparison with Financial Accounting Cost Accounting System
5
6
Objectives of Cost Accounting, Necessity for Cost Accounting System, Reports provided by Cost Accounting Department, Essentials of Good Cost Accounting System, Essential Factors for Good Cost Accounting System, Important Features of a Performance Measurement Costing, Practical Difficulties in Installation, Suggestions to Overcome Practical Difficulties, Limitations of Cost Accounting. Methods of Costing
13
SPECIFIC ORDER COSTING - Job Costing, Contract Costing, Batch Costing; CONTINUOUS OPERATION COSTING - Process Costing, Operation Costing, Unit Costing, Service Costing. Types of Costing Systems
14
Historical Costing, Absorption Costing, Direct Costing, Marginal Costing, Standard Costing, Uniform Costing. Key Terms
Theoretical Questions
15
16
True or False Statements
17
Choose Correct Answer 18 .................................................................................................................................. .....................
Chapter 2
COST CONCEPTS : TERMINOLOGY AND CLASSIFICATION Cost Management
22
Need for Cost Management, Composite Cost Unit, Standing Order Number vs. Cost Account Number, Strategic Cost Management. Classification of Costs
24
CLASSIFICATION OF COSTS BY NATURE - Material Cost, Labour Cost, Expenses; COST CLASSIFICATION IN RELATION TO COST CENTRE Direct Costs, Indirect Costs; COST CLASSIFICATION BY TIME - Historical Cost, Predetermined Cost, Standard Cost, Estimated Cost; COST CLASSIFICATION FOR DECISION MAKING - Marginal Cost, Differential Cost, Opportunity Cost, Relevant Cost, Sunk Cost, Replacement Cost, Normal Cost, Abnormal Cost, Avoidable Cost, Unavoidable Cost, Pre-production Cost, Product Cost, Period Cost, Traceable Cost, Common Cost, Controllable Cost, Uncontrollable Cost, Short-run Cost, Long-run Cost, Past Cost, Future Cost, Explicit Cost, Implicit Cost, Book Cost, Shutdown Cost, Abandonment Cost, Urgent Cost, Postponable Cost, Conversion Cost; COST CLASSIFICATION BY NATURE OF PRODUCTION PROCESS - Batch Cost, Process Cost, Operation Cost, Operating Cost, Contract Cost, Joint Cost. Cost Codification
32
Definition and Meaning, Objectives of Codification, Requirements of Efficient Coding System, Methods of Codification of Costs. Key Terms
35
Theoretical Questions
37
True or False Statements
38
Choose Correct Answer 39 Examination Problems 41 .................................................................................................................................. ..................... C-11
C-12
Cost Accounting
Chapter 3
COST CONCEPTS : BEHAVIOUR AND SEGREGATION Behaviourwise Cost Classification
45
Classification of Costs based on Variability - Variable Cost, Fixed Cost, Semi-variable or Semi-fixed Cost, Specific and Common Fixed Cost, Committed Fixed Cost, Discretionary Fixed Cost, Engineered Cost, Managed Cost, Capacity Cost, Programmed Cost; Diagrammatic Presentation of Cost Behaviour, Importance of Behaviourwise Cost Classification. Segregation of Semi-variable Costs
49
Industrial Engineering Method, Account Inspection Method, Scatter Graph Method, High and Low Method, Regression Analysis, Multiple Regression Analysis, Assumptions in Regression Analysis, Precautions in Using Regression Analysis. Coefficient of Correlation and Coefficient of Determination
57
Coefficient of Correlation, Coefficient of Determination. Key Terms
Theoretical Questions
61
62
True or False Statements
63
Choose Correct Answer 63 Examination Problems 66 .................................................................................................................................. .....................
Chapter 4
DIRECT MATERIAL : PROCUREMENT PROCEDURES AND ACCOUNTING OF ISSUES Purchase and Stores Routine
72
Definition and Meaning of Raw Materials, Bill of Materials, Purchase Requisition, Purchase Order, Material Inspection Note, Goods Received Note, Stores Requisition Note, Material Transfer Note, Material Return Note, Bin Card, Stores Ledger. Pricing of Material Issues
79
Components in Direct Material Cost; Methods of Pricing Material Issues - Actual Cost Method, First In First Out Method, Last In First Out Method, Highest In First Out Method, Simple Average Cost Method, Weighted Average Cost Method, Periodic Average Cost Method, Standard Cost Method, Replacement Cost Method, Next In First Out Method, Base Stock Method; Factors Effecting Selection of Pricing Method; Suitability of Pricing Method in Rising Prices. Material Shortages
86
Reasons for Stock Discrepancies, Steps to Avoid Stock Discrepancies, Accounting Procedure for Material Shortages. Inventory Systems
90
Material Control System, Perpetual Inventory System, Continuous Stock Taking System, Periodic Stock Taking System, Two Bin System. Key Terms
Theoretical Questions
93
94
True or False Statements
95
Choose Correct Answer 96 Examination Problems 98 .................................................................................................................................. .....................
Chapter 5
DIRECT MATERIAL : STOCK CONTROL TECHNIQUES Importance of Inventory Control
112
Definition and Meaning of Inventory, Features of Ideal Inventory Policy, Requirements of Stock Control, Impact of Inflation on Inventory Holding. Inventory Control Ratios
114
Input-Output Ratio, Stock Turnover Ratio.
Contents C-13
Inventory Control Techniques
116
Economic Order Quantity, Pull System in Inventory Control, Fixation of Inventory Levels, VED Analysis, FNSD Analysis, ABC Analysis, Just In Time Inventory Management. Key Terms
Theoretical Questions
126
127
True or False Statements
128
Choose Correct Answer 129 Examination Problems 131 .................................................................................................................................. .....................
Chapter 6
DIRECT LABOUR : REMUNERATION SYSTEMS Items of Labour Cost
151
Direct Labour Cost, Indirect Labour Cost, Items of Labour Cost. Studies at Work Place and Job Appraisal
151
Time and Motion Study, Method Study, Work Study, Activity Sampling, Work Simplification, Job Evaluation, Merit Rating. Time Rate Remuneration Plans
154
Suitability, Advantages and Disadvantages, Flat Time Rate Plan, High Day Rate Plan, Plan with Different Time Rates, Halsey Premium Bonus Plan, Rowan Premium Bonus Plan, Comparison of Halsey and Rowan Plans, Halsey-Wair Plan, Accelerated Premium Bonus Plan, Emerson’s Efficiency Bonus Plan, Barth Variable Bonus Plan, Bedaux Points Plan, Gnatt’s Task Bonus Plan. Piece Rate Remuneration Plans
164
Straight Piece Rate Plan, Piece Rate with Guaranteed Time Rate Plan, Differential Piece Rate Plan, Taylor’s Differential Piece Rate Plan, Merrick’s Differential Piece Rate Plan. Group Bonus Plans
168
Applicability, Advantages and Disadvantages, Priestman’s Production Bonus Plan, Cost Efficiency Bonus Plan, Rucker’s Plan, Nunn-Bush Plan, Towne Gain Sharing Plan, Profit Sharing Plan, Co-partnership Plan. Requisites of Good Wage Incentive Plan Key Terms
172
Theoretical Questions
173
174
True or False Statements
174
Choose Correct Answer 175 Examination Problems 178 .................................................................................................................................. .....................
Chapter 7
DIRECT LABOUR : TURNOVER AND ACCOUNTING Labour Cost Records
198
Clock Card, Daily or Weekly Time Sheet, Job Cards, Piece Work Cards. Accounting of Labour Cost
198
Payroll Accounting, Labour Cost Accounting, Time Keeping, Time Booking. Labour Turnover
201
Causes of Labour Turnover - Avoidable Causes, Unavoidable Causes, Measures to Reduce Labour Turnover, Measurement of Labour Turnover, Costs of Labour Turnover - Preventive Costs, Replacement Costs, Treatment of Cost of Labour Turnover. Idle Time
208
Causes of Idle Time - Causes of Normal and Abnormal Idle Time, Accounting Treatment of Idle Time - Normal and Abnormal Idle Time.
C-14
Cost Accounting
Overtime Premium
210
Accounting Treatment, Measures to Control Overtime Premium, Disadvantages of Overtime Working. Treatment of Special Labour Costs
211
Cost of Apprentice, Employee Welfare Costs, Fringe Benefits, Bonus, Gratuity. Incentive Schemes
212
Incentive Schemes for Indirect Workers, Indirect Incentive to Direct Workers, Casual and Out Worker. Key Terms
Theoretical Questions
213
214
True or False Statements
215
Choose Correct Answer 216 Examination Problems 219 .................................................................................................................................. .....................
Chapter 8
OVERHEADS : ALLOCATION AND APPORTIONMENT Accounting of Overheads
234
Definition and Meaning of Overheads, Definition and Meaning of Direct Expense, High Overhead Costs and Test of Efficiency, Steps in Accounting of Overheads, Classification and Codification of Overheads, Collection of Overheads, Cost Allocation, Criteria for Common Cost Allocation, Allocation and Apportionment of Overheads, Departmentalization, Allocation, Apportionment, Criteria for Apportionment of Overheads, Distinction Between Allocation and Apportionment. Production Overhead
239
Classification of Production Cost, Representative Types and Basis of Apportionment. Re-apportionment of Service Centre Costs
240
Rationale for Allocating Service Department Costs, Direct Method, Step Method, Repeated Distribution Method, Simultaneous Linear Equation (Matrix) Method. Administration Overhead
248
Definition and Meaning, Classification of Administration Cost, Representative Types of Administration Overhead, Treatment of Administrative Overheads in Cost Accounting. Selling and Distribution Overheads
249
Meaning and Classes, Basis of Apportionment, Accounting, Problems in Controlling. Key Terms
253
Theoretical Questions
254
True or False Statements
255
Choose Correct Answer 255 Examination Problems 258 .................................................................................................................................. .....................
Chapter 9
OVERHEADS : ABSORPTION AND RECOVERY Absorption of Production Overheads
279
Definition and Meaning, Methods of Production Overhead Absorption - Production Unit Method, Percentage of Direct Material Cost Method, Percentage of Direct Labour Cost Method, Percentage of Price Cost Method, Direct Labour Hour Rate Method, Machine Hour Rate Method. Single and Departmental Overhead Absorption Rates
284
Single Overhead Absorption Rate, Departmental Overhead Absorption Rates, Predetermined Overhead Absorption Rates.
Contents C-15
Over and Under Absorption of Overheads
286
Reasons for Over or Under Recovery, Treatment of Under/Over Absorption of Overheads. Key Terms
Theoretical Questions
288
288
True or False Statements
289
Choose Correct Answer 289 Examination Problems 291 .................................................................................................................................. .....................
Chapter 10
OVERHEADS : TREATMENT OF SPECIAL ITEMS Idle Capacity Costs
311
Interest on Capital
311
Arguments in Favour of Inclusion, Arguments Against Inclusion. Depreciation
313
Definition and Meaning, Depreciation and Cashflow, Depreciation and Inflation, Obsolescence, Depreciation and Obsolescence : Distinction, Methods of Providing Depreciation, Importance of Sound Depreciation Policy, Plant and Other Fixed Assets Registers, Using of Asset After Fully Depreciated. Treatment of Special Items of Overheads
316
Idle Capacity Costs, Material Handling Expenses, Market Research Expenses, Subscriptions and Donations, After Sales Service Costs, Royalties and Patent Fees, Training Costs, Taxation, Financing Charges, Major Repairs to Equipment, Cost of Tools, Bad Debts, Notional Rent, Packing Expenses, Data Processing Cost, Stores Overhead, Erection and Dismantling of Plant and Machinery, Transport Cost, Insurance Cost. Research and Development Costs
321
Examples of R&D Costs, Treatment of Research Cost, Treatment of Development Cost. Waste, Scrap, Spoilage and Defectives
322
WASTE - Accounting of Waste, Control of Waste; SCRAP - Accounting of Scrap, Classification of Scrap, Control of Scrap; SPOILAGE - Accounting of Spoilage, Control of Spoilage; DEFECTIVES - Causes of Defectives, Classification of Defectives, Accounting of Defectives, Control of Defectives. Key Terms
Theoretical Questions
325
326
True or False Statements
327
Choose Correct Answer 327 Examination Problems 328 .................................................................................................................................. .....................
Chapter 11
ACTIVITY BASED COSTING : SYSTEMS AND PROCEDURES Traditional Cost System
334
How Traditional Cost System Works? Classification of Manufacturing Costs, Dangers of Incorrect Cost Information, Inadequacies of Traditional Cost Systems, Reasons for Emergence of Activity Based Costing System, Features of Cost System in World-Class Company. Meaning and Objectives of ABC
337
Definition and Meaning, Objectives of ABC. Steps in ABC System
340
Distinction between Value Added and Non-Value Added Activities, Different Categories of Cost Pools and its Cost Drivers, Difficulties in adoption of ABC in Service Organization. Advantages and Limitations of ABC
349
Advantages, Limitations, How ABC System Supports Corporate Strategy?
C-16
Cost Accounting
Other Concepts in ABC
351
Activity Based Information and Decision Making, Activity Based Budgeting, Activity Based Management, Activity Based Accounting. Key Terms
Theoretical Questions
355
356
True or False Statements
357
Choose Correct Answer 358 Examination Problems 360 .................................................................................................................................. .....................
Chapter 12
COSTING METHODS : OUTPUT COSTING, JOB COSTING AND BATCH COSTING Output Costing
384
Meaning, Ascertainment of Cost of Production and Profit, Multiple Costing, Production Account and Cost Sheet : Distinction. Job Costing
388
Definition and Meaning, Features, Procedures, Advantages. Batch Costing
392
Definition and Meaning, Economic Batch Production, Job Costing and Batch Costing : Distinction. Key Terms
Theoretical Questions
396
396
True or False Statements
397
Choose Correct Answer 397 Examination Problems 400 .................................................................................................................................. .....................
Chapter 13
CONTRACT COSTING : RUNNING CONTRACTS AND CONTRACTS NEARING COMPLETION Definition and Features
423
Definition and Meaning of Contract Costing, Features of Contracts, Job Costing and Contract Costing : Distinction. Accounting Procedure
424
Accounting Treatment of Costs, Surveyor’s Certificate and Retention Money, Ascertainment of Work-in-Progress. Costing of Running Contracts
425
Costing of Contracts Nearing Completion Cost Plus Contracts
427
429
Definition and Meaning, Principles, Merits and Demerits, Bid Costing and Cost Plus Contract Costing : Distinction. Fixed Price Contract with Escalation Clause Key Terms
431
Theoretical Questions
433
434
True or False Statements
435
Choose Correct Answer 435 Examination Problems 438 .................................................................................................................................. .....................
Chapter 14
OPERATING COSTING : APPLICATION IN SERVICE SECTOR Meaning of Service Costing
465
Definition of Service Costing, Service Cost per Unit, Application of Service Costing, Service Costing and Output Costing : Distinction.
Contents C-17
Forms of Service Costing
467
Transport Costing, Absolute and Commercial Tonne- Kms., Hotel Costing, Canteen Costing, Power House Costing, Hospital Costing, Customer Costing in Service Sector, Customer Profitability Analysis, Pricing by Service Sector. Key Terms
Theoretical Questions
477
477
True or False Statements
478
Choose Correct Answer 478 Examination Problems 480 .................................................................................................................................. .....................
Chapter 15
PROCESS COSTING : ASCERTAINMENT OF COST AND PROFITABILITY Process Costing
498
Definition and Meaning, Features, Job Costing and Process Costing : Distinction. Process Losses and Gains
499
Normal Loss, Abnormal Loss, Abnormal Gain. Operation Costing Key Terms
502
Theoretical Questions
503
504
True or False Statements
504
Choose Correct Answer 505 Examination Problems 507 .................................................................................................................................. .....................
Chapter 16
PROCESS COSTING : EQUIVALENT UNITS Valuation of Work-in-Progress
524
Definition and Meaning of Equivalent Production, Valuation of WIP when only Closing WIP exists, Valuation of WIP when Opening and Closing WIP exists - FIFO Method, LIFO Method, Average Cost Method; Steps in Valuation of Equivalent Units. Key Terms
Theoretical Questions
529
529
True or False Statements
529
Choose Correct Answer 529 Examination Problems 530 .................................................................................................................................. .....................
Chapter 17
JOINT PRODUCTS AND BY-PRODUCTS : ASCERTAINMENT OF COST AND PROFITABILITY; DECISIONS ON FURTHER PROCESSING Joint Products
549
Definition and Meaning of Joint Products, Meaning of Co-Products. Methods of Accounting for Joint Products
550
Physical Units Method, Market Value Method, Contribution Margin Method, Average Unit Cost Method, Survey Method, Standard Cost Method, Direct Allocation Method. By-Products
552
Definition and Meaning of By-Products, Scrap and B y-Product : Distinction, Meaning of Waste. Methods of Accounting for By-Products
553
Cost Methods, Non-Cost or Sales Value Method, Selection of Appropriate Accounting Method, Joint Product and By-Product : Distinction, Objectives for Allocation of Joint Costs. Key Terms
556
Theoretical Questions
557
True or False Statements
558
Choose Correct Answer 558 Examination Problems 560 .................................................................................................................................. .....................
C-18
Cost Accounting
Chapter 18
RECONCILIATION OF PROFIT : COST ACCOUNTS AND FINANCIAL ACCOUNTS Cost and Financial Accounts : Reconciliation of Profit
576
Need for Reconciliation, Reasons for Disagreement. Method of Reconciliation
578
Memorandum Reconciliation Account, Reconciliation Statement. Key Terms
Theoretical Questions
582
582
True or False Statements
583
Choose Correct Answer 583 Examination Problems 584 .................................................................................................................................. .....................
Chapter 19
COST BOOK-KEEPING : NON-INTEGRATED AND INTEGRATED COST SYSTEMS Non-Integrated Accounting
600
Meaning, Inter-locking of Accounts, Principal Ledgers and Control Accounts. Integrated Accounting System
604
Definition and Meaning, Benefits, Prerequisites for Integration of Accounts Accounting Treatment
615
Pre-requisites for computerization of Accounts, Accounting Entries under both Methods. Key Terms
Theoretical Questions
618
618
True or False Statements
619
Choose Correct Answer 619 Examination Problems 620 .................................................................................................................................. .....................
Chapter 20
BREAK-EVEN AND COST-VOLUME-PROFIT ANALYSIS : IN MULTI PRODUCT AND UNCERTAINTY SITUATIONS Break-even Analysis
639
Construction of Break-even Chart, Formulas used in Break-even Analysis, Assumptions and Limitations, Cash Break-even, ProfitVolume Ratio, Margin of Safety, Angle of Incidence, Relationship of BEP, Margin of Safety and Angle of Incidence, Impact of Selling Price, Fixed Cost and Variable Cost on BEP. Cost-Volume-Profit Analysis
647
Meaning of CVP Analysis, Procedure in CVP Analysis, Benefits of CVP Analysis, Assumptions in CVP Analysis, Practical Difficulties in CVP Analysis. Profit-Volume Chart
650
Construction of Profit-Volume Chart, Profit-Volume Chart with Change in Selling Price, Profit-Volume Chart in Multi-Product Situations. Curvilinear Break-even Analysis
656
CVP Analysis Under Uncertainty : Simulation Technique
658
Statistical Distributions CVP Analysis Under Uncertainty : Normal Distribution Curve Application of Linear Programming in CVP Analysis
664
659
Contents C-19
Simulated Break-even Point Analysis Key Terms
665
Theoretical Questions
666
667
True or False Statements
668
Choose Correct Answer 669 Examination Problems 673 .................................................................................................................................. .....................
Chapter 21
MARGINAL COSTING TECHNIQUE : APPLICATIONS IN DECISION MAKING Absorption Costing
700
Meaning of Absorption Costing, Growing Importance of Overheads, Criteria for Absorption of Overheads, Advantages and Limitations of Absorption Costing. Direct Costing
703
Meaning of Direct Costing, Direct Costing and Absorption Costing : Distinction. Marginal Costing
704
Meaning of Marginal Cost and Marginal Costing, Contribution and Profit : Distinction, Formulas used in Marginal Costing, Features of Marginal Costing, Arguments in Favour of Marginal Costing, Criticism Against Marginal Costing, Absorption Costing and Marginal Costing : Distinction, Absorption Costing and Marginal Costing : Impact on Profit. Practical Applications of Marginal Costing
714
Key or Limiting Factor Analysis, Profit Planning, Selection of Profitable Product Mix, Make or Buy Decisions, Introduction of a New Product, Discontinuance of a Product or Closure of a Department, Accept or Reject Special Offer and Subcontracting, Planning of Activity Level, Market Expansion, Temporary Cessation of Operations. Key Terms
Theoretical Questions
719
720
True or False Statements
722
Choose Correct Answer 722 Examination Problems 726 .................................................................................................................................. .....................
Chapter 22
BUDGETING : PREPARATION OF BUDGETS AND CONTROL OF VARIANCES Definition and Meaning of Budgetary System
789
Meaning and Definition - Budget, Budgeting, Budgetary Control, Budget and Forecast : Distinction, Requirements of a Sound Budgeting System, Advantages of Budgeting, Problems in Budgeting. Budgeting Process
793
Steps in Budgeting Process, Other Requirements in Budgeting Process. Preparation of Budgets and Analysis of Variances
797
Kinds of Budgets, Analysis of Cost Variances, Behavioural Aspects of Budgeting. Flexible Budgeting
802
Meaning, Proforma of Flexible Budget, Advantages and Disadvantages of Flexible Budget, Fixed Budget and Flexible Budget : Distinction. Zero Base Budgeting
805
Meaning of ZBB, Requisites for Implementation of ZBB, Features of ZBB, ZBB and Traditional Budgeting : Distinction, ZBB and Incremental Budgeting, ZBB and Decision Packages, ZBB and Feedback Control, Benefits of ZBB, Criticism of ZBB. Program Budgeting
810
Meaning of PPBS, Constituent Parts of PPBS, PPBS and Conventional Budgeting : Distinction, Stages in PPBS, Procedure for Developing PPBS, Advantages of PPBS.
C-20
Cost Accounting
Performance Budgeting
813
Meaning, Requisites, Comparison with Traditional Budgeting and Program Budgeting, Steps in Implementation, Purposes, Requirements for Introduction. Rolling Budgeting
816
Meaning, Advantages and Disadvantages. Planning and Control Budgeting
817
Meaning, Planning Budget and Control Budget : Distinction, Critical Planning Variables, Similarities and Differences. Responsibility Budgeting
819
Meaning, Proforma of Responsibility Budget. Participative Budgeting
820
Meaning, Advantages. Key Terms
Theoretical Questions
821
823
True or False Statements
824
Choose Correct Answer 825 Examination Problems 827 .................................................................................................................................. .....................
Chapter 23
STANDARD COSTING : TERMINOLOGY, VARIANCE ANALYSIS AND INVESTIGATION Standard Costing System
857
Definition and Meaning of Standard Costing, Objectives of Standard Costing, Terminology on Standards, Types of Standards, Setting Standards, Standard Costing System During Inflation, Standard Costing and Activity Based Costing, Standard Costing and AMT, Standard Cost Card, Responsibility for Setting Standards, Setting Up Production Standards and Establishment of Standard Costs, Problems in Setting Standard Costs, Advantages of Standard Costing, Criticism on Standard Costing, Standard Cost and Estimated Cost : Distinction, Standard Costing and Budgetary Control : Distinction, Behavioural Consideration in Standard Costing. Variance Analysis
868
Definition and Meaning, Material Variances, Labour Variances, Variable Production Overhead Variances, Fixed Production Overhead Variances, Sales Variances, Sales Variances Based on Profit, Sales Variances Based on Turnover, Profit Variances, Disposal of Variances. Revision of Standards, Interpretation and Disposal of Variances
895
Revision of Standards, Revision Variance, Interpretation of Variances, Causes of Variance, Reasons for Cost Variances, Interdependence Between Variances, Disposal of Variances. Techniques of Investigation of Variances
899
Heuristics, Trend Analysis, Statistical Control Charts, Decision Tree Approach, Decision Theory Approach (Game Theory), Economics of Control of Variances. Key Terms
Theoretical Questions
910
911
True or False Statements
912
Choose Correct Answer 913 Examination Problems 916 .................................................................................................................................. .....................
Chapter 24
UNIFORM COSTING AND INTERFIRM COMPARISONS Uniform Costing
961
Definition and Meaning, Objectives, Requisites for Installation, Uniform Cost Manual and Its Contents, Benefits and Limitations.
Contents C-21
Interfirm Comparisons
966
Meaning, Prerequisites, Problems, Advantages and Limitations. Key Terms
Theoretical Questions
969
970
Choose Correct Answer
970
Examination Problems 971 .................................................................................................................................. .....................
Chapter 25
COST AUDIT AND MANAGEMENT AUDIT Cost Audit
974
Definition and Meaning, Objectives, Important Legal Provisions, Important Provisions of Cost Audit Report Rules, 1996, Cost Audit and Financial Audit : Distinction, Cost Accounting Records. Management Audit
980
Definition and Meaning, Objectives, Scope, Weaknesses Revealed. Efficiency Audit and Propriety Audit
982
Efficiency Audit, Propriety Audit. Key Terms 983 Theoretical Questions 983 Choose Correct Answer 984 .................................................................................................................................. .....................
Chapter 26
LATEST DEVELOPMENTS IN COST ACCOUNTING Target Costing
986
Definition and Meaning of Target Costing, Steps in Target Costing, Target Costing Methodology, Target Costing Approach to Product Pricing, Methods of Establishment of Target Costs. Backflush Accounting
994
Definition and Meaning, Problems, Advantages, Variants of Backflush Accounting. Throughput Accounting
1000
Meaning and Definition, Basic Concepts, Traditional Product Costing and Throughput Accounting (TA) : Distinction, Bottlenecks and Overhead Attribution. Resource Consumption Accounting
1004
Definition and Meaning, Methodology in Implementation of RCA, Advantages of RCA, Difficulties in Implementation of RCA. Lean System
1007
Meaning of Lean Thinking, Steps in Lean Thinking, Lean Production System, Meaning of Lean Management Accounting, Advantages of Lean Management Accounting. Attributable Costing Key Terms
1010
1010
Theoretical Questions
1011
True or False Statements
1012
Choose Correct Answer 1012 .................................................................................................................................. .....................
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