Cost Accounting notes – KNEC Diploma

Cost Accounting

• KNEC: Diploma in Business Management – Module II

• KNEC: Diploma in Supply Chain Management – Module I

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Topics covered
Topic 1: Introduction to costing accounting
Topic 2: Elements of cost and cost behaviour
Topic 3: Material costing
Topic 4: Labour costing
Topic 5: Costing for overheads
Topic 6: Process costing
Topic 7: Contract costing
Topic 8: Batch costing
Topic 9: Factory job costing
Topic 10: Service costing
Topic 11: Emerging issues in cost accounting

Introduction
This module unit is intended to equip the trainee with knowledge, skills and attitudes that will enable him/her to ascertain costs and prepare performance reports in a business set up.

General Objectives
At the end of this module unit, the trainee should be able to:

1. Apply costing concepts in a business management
2. Cost goods and services using various costing methods
3. Price goods and services using various pricing methods
4. Carry out cost allocation for various overheads
5. Apply simple costing techniques as used in modem business set ups

Topic 1: Introduction to Cost Accounting

• Nature of cost accounting
• Importance of cost accounting
• Basic terms used in cost accounting
• Principles of cost accounting
• Distinction between cost accounting and financial accounting
• Characteristics of an effective cost accounting system
• Duties of a cost accountant

Topic 2: Elements of Cost and Cost Behaviour

• Elements of costs of a product
• Cost classification
• Importance of cost information
• Cost statement format

Topic 3: Material Costing

• Stock taking methods
• Control procedures
• Aspects
• Stock valuing methods
• Methods of valuing material issues
• Stores ledger/account format

Topic 4: Labour Costing

• Meaning of labour costs
• Ascertainment of labour costs
• Classification of labour costs
• Methods of calculating labour costs
• Calculation of labour costs using labour costs methods
• Payroll format

Topic 5: Costing for Overheads

• Meaning of overhead
• Overheads expenses
• Distinction between allocation, apportionment and absorption
• Classification of overhead expenses into their respective categories
• Overhead analysis sheet format
• Calculation of overhead absorption rates

Topic 6: Process Costing

• Definition of process costing
• Elements of process costing
• Process account format
• Abnormal loss account format
• Normal loss account format
• Scrap debtor account
• Finished goods stock account
• Work-in-progress calculation
• Statement of equivalent production format

Topic 7: Contract Costing

• Definition of contract costing
• Features of contract costing
• Preparation of contract account
• Preparation of contractee account

Topic 8: Batch Costing

• Definition batch costing
• Procedures for preparation of batch statements

Topic 9: Factory Job Costing

• Nature of factory job costing
• Procedures in factory job costing
• Job cost card layout
• Cost estimates

Topic 10: Service Costing

• Nature of service costing
• Common costs units used in service costing
• Preparation of operations cost statement

Topic 11: Emerging Issues

• Emerging issues in cost accounting
• Challenges posed by emerging issues and trends
• Coping with Challenges posed by emerging issues and trends