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COST MANAGEMENT

by Jntu Heroes
Type: NoteInstitute: JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY Downloads: 27Views: 716Uploaded: 8 months agoAdd to Favourite

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Jntu Heroes
Jntu Heroes
Cost Management 14MBAFM305 Subject Code : 14MBAFM305 No. of Lecture Hours/Week : 04 Total No. of Lecture Hours : 56 Practical Component : 01 Hour / Week IA Marks : 50 Exam Hours : 03 Exam Marks : 100 Module I Introduction to Cost Management – Cost Accounting to Cost Management – Elements of costs – classification of costs – Methods of costing – Cost Management Tools – A Strategic View to Cost Management – Preparation of a Cost Sheet. Module II Overheads, Classification and Collection, Difference between Cost Allocation and Cost Apportionment, (Full-fledged Problems on Primary and secondary distribution, Simultaneous equations, Absorption of overhead, Theory on under and Over absorption of Overhead). Module III Marginal Costing – Nature and Scope – Applications – Break even charts and Point, Decision Making (all types with full problems) Differential Cost Analysis, Advantages and Disadvantages of Marginal Costing. Module IV Budgetary Control – Objectives of Budgetary control, Functional Budgets, Master Budgets, Key Factor Problems on Production and Flexible Budgets. Standard Costing – Comparison with Budgetary Control, analysis of variances, simple problems on Material and Labour Variances Only. Module V Demerits of Traditional Costing, Activity Based Costing, Cost Drivers, Cost Analysis under ABC (Unit level, Batch level and Product Sustaining Activities), Benefits and weaknesses of ABC, Simple Problems under ABC. 1 Dept. of MBA / SJBIT Page 1
Cost Management 14MBAFM305 Module VI Cost Audit – Objectives, Advantages, Areas and Scope of Cost Audit, Cost Audit in India – Practical – Read the contents of the report of Cost Audit and the annexure to the Cost Audit Report. Management Audit – Aims and the objectives, Scope of Management Audit. Module VII Reporting to Management – Purpose of reporting – Requisites of a good report, Classifications of Report, Segment reporting, Applicability of Accounting Standard 17, Objectives, Users of Segment reporting. Cost Reduction, and Cost Control, Target Costing – its Principles, Balanced Scorecard as a performance measure – Features, Purpose, Reasons for use of Balanced Scorecard. RECOMMENDED BOOKS: 1. Cost Accounting: Theory & Practice – Bhabatosh Banerjee 13/e, PHI. 2. A text book of cost and management accounting – Arora M N, 11/e, Vikas. 3. Cost Accounting – Jawaharlal & Seema Srivastava, 4/e, TMH. 4. Accounting & Costing for Management – Sinha P K, Excel Books, 2010 REFERENCE BOOKS: 1. Cost Accounting – Khan & Jain, TMH. 2. Principles and Practice of Cost Accounting – Bhattacharyya, 3/e, PHI. 3. Management Accounting – Khan M Y & Jain P K, 6/e, McGraw Hill, 2012. 2 Dept. of MBA / SJBIT Page 2
Cost Management 14MBAFM305 TABLE OF CONTENTS MODULE NO. CONTENTS PAGE NO. I INTRODUCTION TO COST MANAGEMENT 4 – 26 II OVERHEADS 27 – 37 III MARGINAL COSTING 38 – 49 IV BUDGETARY CONTROL 50 – 80 V TRADITIONAL COSTING 81 – 85 VI COST AUDIT 86 – 100 VII REPORTING TO MANAGEMENT 101 – 113 3 Dept. of MBA / SJBIT Page 3
Cost Management 14MBAFM305 Module I Introduction to Cost Management – Cost Accounting to Cost Management – Elements of costs – classification of costs – Methods of costing – Cost Management Tools – A Strategic View to Cost Management – Preparation of a Cost Sheet. Cost Accounting to Cost Management According to the dictionary meaning cost is the price paid for something. In other words cost is the amount of resources used for something which must be measured in terms of money. Cost is defined as the amount of expenditure whether actual or notional incurred on or attributable to a given thing or to ascertain the cost of a given thing. According to CIMA, London, ―costing is the techniques and processes of ascertaining cost‖. In simple, it is the methods used and the actual process involved in cost finding. The technique of costing involves two fundamental step namely: a. Collection and classification of expenditure according to the cost elements and, b. Allocation and apportionment of the expenditure to the cost centers or cost units. Cost Accounting deals with collection, analysis of relevance of cost data for interpretation and presentation. CIMA defines cost accounting ―as the process of accounting for costs from the point at which the expenditure is incurred or committed to the establishment of its ultimate relationship with cost centers and cost units.‖ Cost management is the process of planning and controlling the budget of a business. Cost management is a form of management accounting that allows a business to predict impending expenditures to help reduce the chance of going over budget. Cost management is the process of effectively planning and controlling the costs involved in a business. It is considered one of the more challenging tasks in business management. Generally, the costs or the expenses in a business are recorded by a team of experts using expense forms. The process involves various activities such as collecting, analyzing, evaluating and reporting cost statistics for budgeting. By implementing an effective cost management system, a company‘s overall budgeting can be brought under control. 4 Dept. of MBA / SJBIT Page 4

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