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MBA ManAc - Intro PDF

This document provides information on a Managerial Accounting course including the breakdown of assessment (30% quizzes, 20% assignments, 50% end sem exam). It also includes a list of topics to be covered in the syllabus such as introduction to concepts, statement of cost, activity based costing, budgeting, cost-volume-profit analysis, and standard costing. Finally, it discusses the scope, advantages and classification of costs according to elements, behavior, function, period/time, and product for managerial decision making.

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Reeya Mehta
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134 views

MBA ManAc - Intro PDF

This document provides information on a Managerial Accounting course including the breakdown of assessment (30% quizzes, 20% assignments, 50% end sem exam). It also includes a list of topics to be covered in the syllabus such as introduction to concepts, statement of cost, activity based costing, budgeting, cost-volume-profit analysis, and standard costing. Finally, it discusses the scope, advantages and classification of costs according to elements, behavior, function, period/time, and product for managerial decision making.

Uploaded by

Reeya Mehta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MANAGERIAL ACCOUNTING

FAC513
Quizzes
30 %

Assignments
20 %

End Sem
50 %
Syllabus
 Introduction and Concepts
 Statement of Cost
 Activity Based Costing
 Budgeting and Budgetary Control
 Cost-Volume-Profit Analysis
 Standard Costing and Variance Analysis
MANAGERIAL ACCOUNTING :
An Introduction
Accounting

Financial Cost Management


Preparing P & L A/c
Financial and Balance sheet
Accounting

Analysing cost for


Cost Accounting control and maximum
efficiency

Management Assisting management


Accounting for planning, decision
making & control
Management Accounting

 “The process of identification, measurement, accumulation,


analysis, preparation and communication of financial
information used by management to plan, evaluate and control
within the organization and to assure appropriate use and
accountability for its resources”.
Scope of Management Accounting:

Financial accounting

Cost accounting

Budgeting and forecasting

Tax planning

Reporting to management
Cost control procedure

Statistical tool

Internal control and internal audit

Financial analysis and interpretation

Office services
Advantages of Cost Accounting
 Advantages to Management:
Reveals profitable and unprofitable activities

Helps in cost control

Helps in decision making

Guides in fixing selling price

Helps in inventory control


Aids in manufacturing policies

Helps in cost reduction

Reveals idle capacity

Checks the accuracy of financial accounts

Prevents frauds and manipulations


Financial V/s Management Accounting
Purpose / Audience
Statutory requirements
Analysis of costs and profits
Periodicity of reports
Control aspect
Historical and predetermined cost
Format of presenting information
Types of transaction recorded
Types of statements prepared
COST CONCEPTS
Cost
 According to Cost Accounting Standards of ICWA (now
CMA) of India :
“Cost is a measurement, in monetary terms, of the amount
of resources used for the purpose of production of goods or
rendering services”.
Cost Unit:
 Helps in ascertaining the cost of saleable products or services.
 “Unit of product, service or time in relation to which cost may
be ascertained or expressed”

 Eg:
Cement – Tonnes
Bricks – 1000 bricks
Hospitals – Bed-days
Printing Press – 1000 copies
Electricity - KiloWattHours
Cost Object :
 Any thing for which a measurement of cost is desired,
but this thing may not be a saleable item / service.

 Eg :
Cost of providing telephone hotline for customer case,
Cost of running the legal department,
Cloth Screening machine in QA department,
Research and Development cost to enhance a feature of the
product etc
Techniques of Managerial Costing

Marginal costing

Budgetary control

Standard costing

Uniform costing

Total absorption costing


Classification of Costs
Element

Others Behaviour

Classification
Managerial of cost
decision Function
making

Period/
Time
Product
Classification on the basis of Elements:

Material

 Direct Cost
Labour
 Indirect Cost

Expenses
Behaviour wise Classification

Fixed Semi Variable


Variable
Cost Cost Cost
Function wise classification
Production Cost

Administrative Cost

Selling Cost

Distribution Cost

Research Cost

Development Cost

Pre Production Cost


Classification based on Managerial
Decision Making
Marginal Cost

Out of Pocket Cost

Sunk Cost

Opportunity Cost

Replacement Cost

Shut down Cost


Time based Classification

• Ascertained after being incurred.


• Limited utility.
Historical cost • Not helpful for cost- control purposes

• Computed in advance before production


starts, considering all factors affecting costs.
• When compared with actual costs, will give
Predetermined variances and assist the management in
cost taking appropriate remedial actions
Normal cost Abnormal cost

• Includes costs which • Other than normal


are incurred under costs.
routine operating
activities and
conditions.
• Charged to costing
• Part of cost of profit and loss
production. account.
• Eg. Material cost or • Eg. Penalties, fine,
labor cost required as legal charges etc
per standard.
Capital costs Revenue costs

• costs incurred for • costs incurred in order


acquiring assets. to maintain the earning
capacity of the
business.

• E. g. Cost of a rolling • E. g. material costs,


machine in case of a labour costs, salaries,
steel plant. repairs etc.
Budgeted costs Standard costs

• Estimate of expenditure • Pre-determined and


to be incurred for various subsequently compared
activities. with the recorded actual
costs.
• Continuous comparison • Technique of cost
of actual costs ascertainment and cost
control.

• Estimation on the basis • May be used in


of past actual financial conjunction with any
data adjusted to future method of costing.
trends.
Product/ Period wise Classification

Period cost Product cost

• Connected to passage of • Connected to Product


time • To be Expensed when
• To be Expensed when product is sold
incurred • Includes all
• Includes all non manufacturing costs
manufacturing costs like Direct material,
like R&D, design cost, direct labour, machine
distribution cost etc maintenance etc
Thank You
:)

In case of any query, reach out to me on


[email protected]

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