03 CA New

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 .................................................................................................................................. .....................