Harar Teacher Education and Business college

Faculty of Business and Economics

Department of Accounting and Finance
Module Cost & managerial Accounting
Number/Title
Module Code ACFN-3030
Objective of the This module will cover cost accumulation concepts and techniques for Product and Service
module Costing and Planning and Control, as well as Non-routine Managerial Decisions. Modern
management accountants are not only concerned with how cost data are transformed into
cost accounting information but more importantly how to use cost accounting information
to aid managerial goals. It is the case, however, that one cannot effectively use cost
information without a good understanding of how various cost accounting information are
generated.
The module should develop the student's understanding, skill, and analytical ability in cost
and management accounting to the level where he or she can function effectively (and
efficiently) as a professional cost and management accountant in industry, public
accounting, management consulting, government, or personal business management.

Course code AcFn3031

Course Title Cost & management Accounting I
ETCTS Credits 5
Contact Hours 3
(per week)
Lecturer Getahun D. (Msc)
Course Objectives Upon the successful completion of this module, students should be able to:
& Competences to  Use various classifications to analyze costs within the organization.
be Acquired  Describe and apply the principles relating to the costing of the different
resource inputs into a business.
 Demonstrate output costing methods appropriate to a variety of different
businesses.
 Illustrate and evaluate absorption, marginal costing, activity-based costing
methods and other management cost accounting methods and techniques.
 Apply and analyze different types of activity-based management tools through the
preparation of estimates.
 Describe, illustrate and comment on the planning and control uses of
standard costing, budgeting and variance analysis

Course Cost accounting course concerns with fundamental cost concepts, behavior, and analysis
Description and the use of cost information to develop superior decision making process and outputs.
This course introduces the production, communication, and the use of accounting
information within the context of business activities.
.
WEEKS Course Contents

1. Overview of Cost and Management Accounting

2WEEKS 1,1 Objectives of Cost & Management Accounting
{1ST&2ND } 1.2 Cost and management accounting in comparison with
financial accounting: their purposes, the role of cost
accounting as part of a management information system,
and the need for both financial as well as non-financial
information
1.3 Cost classification concepts and terms, such as:
 Direct and indirect costs,
 Fixed and variable costs,
 Period and product costs,
 Controllable and uncontrollable costs,
 Avoidable and unavoidable costs,
 “Sunk” costs,
 Budgeted, standard and actual costs and their
comparisons and analyses
1.4 The use of linear, curvilinear and step functions and how
their calculations are used to analyze cost behavior
1.5 The concepts of cost units, cost centers and profit centers

2:.Cost determination: The costing of resource inputs

3 WEEKS 2.1 Materials

 Accounting for stock (inventory)movements
{3RD- 5TH }  Determination of optimum purchase quantities
 Identification of accounting for stock losses
2.2 Labor
 The difference between direct and indirect labor
 Types of labor remuneration methods
2.3 Overheads
 Overhead cost analyses
 The apportionment and absorption of overhead costs,
including allocation of service department costs.
 Accounting for the over- and under absorption of costs
 IAS 2 inventories on Overhead allocations
2.4 Recording of costs and schedule of costs of products.

2. Costing methods: The costing of resource outputs

3.1 Job order, batch and contract costing methods
5 WEEKS  Characteristics of each method
 Accounting for direct and indirect costs, including
{6TH - 10 TH } the treatment of waste, scrap, spoilage and re work
costs,
3. The Process and Operation or service costing methods:
 Characteristics of the process costing method,
 Identification and use of appropriate cost units,
 Valuation of process transfers and work-in-process
using equivalent units of production and based on
FIFO and average costing methods,
 Accounting for normal and abnormal losses and
gains, joint and by-products
 Scope of operation or service costing,
 Identification of appropriate cost units,
 Considerations relating to the collection,
classification and ascertainment of costs

4. Cost Allocation
5.1 Explain the notions of ‘overhead costs’, ‘indirect
costs’, ‘direct costs’, ‘traceable costs’ and
‘allocated costs’.
2 WEEK 5.2 Explain how accountants choose to create ‘cost
{11TH & 12tTH} centres or ‘cost pools’ in which to gather together
cost data.
5.3 Explain why and how costs may be allocated from
one cost pool or centre to another.
5.4 Support department cost allocation
5.5 Joint and By-products
5.6 Common cost allocation
5. Activity-Based Costing and Management
2 WEEKS 6.1 Activity-based costing; use of cost drivers and
{12TH& 14TH } activities
6.2 Activity Based Costing for Customer Profitability
6.3 Activity Based Management

Assessment/ The evaluation scheme will be as follows:

Evaluation Component Weight coverage
Mid exam 20% Chapter 1 &2
Attendance 10%
Assignment 1 10 Chapter 1 &2
Assignment 2 10 Chapter 3-6
Quiz 1 5%
Quiz 2 5%
Final Exam 40% All chapters
Text Book:
Text and reference  Horngren, Foster, &Datar. Cost Accounting: A
books Managerial Emphasis. 9th Ed. 1997
 Horngren, Sunden& Stratton. Introduction to
Management Accounting. 11th Ed. 1999
Reference Books
 C.T Homgren, Introduction to Management Accounting
4th to 8 th editions, 1999 USA
 C.T. Homgren, Cost Accounting: A Managerial Emphasis
5th to 8th ecitionsprentice Hall Inc. 1982 to 1994
 Homgren, foster, &Datar, Cost Accounting A Managerial
Emphasis. 10 thEcition
L.E. Heitger Managerial Accounting 1th and 2 nd editions,
McGraw Hill , 1998, India
 GetuJemaneh, Management Accounting 1996.
 Ray H.Garrison, Managerial Accounting. 6th edition