JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD

22MBA21F3: STRATEGIC COST AND MANAGEMENT ACCOUNTING

MBA (R22)

Course Objective:

To provide understanding of various aspects in strategic cost and management accounting.
To elucidate the role of cost accounting for better managerial decision making.
To impart knowledge of various aspects in CVP and ABC analysis.
To discuss in detail various aspects in budget and budgetary control.
To help understand the variances and their importance in cost accounting.

Course Outcome

Students will be able to:

Understand the cost analysis and control.
Learn the relevance of unit, job, process costing for strategic decisions.
Learn various aspects of activity-based management.
Understand the role of types of budgets and the budgeting process in non-profit organizations.
Identify the need for establishing cost standards.

UNIT - I: Introduction to Cost and Management Accounting, Cost Analysis and Control

Management Accounting Vs. Cost Accounting Vs. Financial Accounting, Role of Accounting Information Planning and Control, Strategic Decisions and the Management Accountant. Enhancing the value of Management Accounting Systems. Cost Concepts and Managerial use of Classification of Costs, Cost Analysis and Control: Direct and Indirect Expenses, Allocation and Apportionment of Overheads, Calculation of Machine Hour rate.

UNIT - II: Costing for Decision making

Unit Costing, Job Costing, Cost Sheet and Tender and Process

Costing and their Variants, Treatment of Normal Losses and Abnormal Losses, Inter- process Profits, Costing for By-products and Equivalent Production. Application of Managerial Costing for Control, Profit Planning, Closing down of a Plant, Dropping a Product line, Charging General and Specific Fixed Costs, Fixation of Selling Price, Make or Buy Decisions, Key or Limiting Factor. Selection of Suitable Product Mix, Desired level of Profits, Diversification of Products, Closing down or Suspending activities,

UNIT - III: Cost-Volume-Profit (CVP) Analysis and Activity-Based Costing (ABC): Essentials of

CVP Analysis. The Breakeven Point using Equation Method, Contribution Margin Method and Graph Method. Target Operating Income. Target Net Income and Income Taxes. Breakeven Analysis for Decision making. Margin of Safety. Application of BEP for various Business Problems. CVP analysis in Service and Nonprofit Organizations. Activity Based Cost (ABC) Systems: Comparison of Traditional and Activity Based Cost Systems. Emergence of ABC Systems. Activity Hierarchies. Tracing Costs to Activities, Tracing Costs from Activities to Products, Customer Profitability, Process Efficiency. Activity Based Management. ABC Systems in Service Organizations. The Technological Edge of using ABC Systems.

UNIT - IV: Budgetary Control

Budget, Budgetary Control, Steps in Budgetary Control, Flexible Budget,

Different Types of Budgets: Sales Budget, Cash Budget, Production Budget, Performance Budgets and Computerized Budgeting. Activity Based Budgeting. Budgeting Process in Non-Profit Organizations. Zero Based Budgeting. Criticisms of Budgeting. An Introduction to Cost Audit and Managerial Audit

UNIT - V: Standard Costing and Variance Analysis

Standard Costing – Establishing cost

st andards, Standard Cost and Standard Costing, Standard Costing Vs Budgetary Control, Standard Costing Vs Estimated Cost, Standard Costing and Marginal Costing, Analysis of Variance, Material Variance, Labour Variance and Sales Variance. Reconciling Budgeted Profit and Actual Profit. Standard Absorption Costing. Volume Efficiency and Capacity Variance.