Delta College logo

Cost Accounting

Course NumberACC 233
Credits3
Lab Hours0
Lecture Hours45
Course DescriptionPrerequisite: ACC 212 with a C (2.0) minimum grade. Relates principles and methods of handling materials, labor costs, and manufacturing expenses to the formulation of reports to management. Includes job order, process, standard, direct and budgetary costing procedures. (45-0)


Outcomes and Objectives

Demonstrate an introductory knowledge of cost accounting concepts.
Objectives:
  1. Identify and give examples of each of the three basic cost elements involved in the manufacture of a product.
  2. Distinguish between period costs and product costs and give examples of each.
  3. Compare the financial statements of a manufacturing company and those of a merchandising company.
  4. Prepare a schedule of cost of goods manufactured in good form.
  5. Explain the flow of direct materials cost, direct labor cost, and manufacturing overhead cost from the point of incurrence to sale of the completed product.
  6. Identify and give examples of variable costs and fixed costs, and explain the difference in their behavior.
  7. Define and give examples of direct and indirect costs.

Demonstrate assigning manufacturing costs to manufactured goods by job-order costing.
Objectives:
  1. Compute predetermined overhead rates and explain why estimated overhead costs (rather than actual overhead costs) are used in the costing process.
  2. Demonstrate the flow of direct materials cost, direct labor cost, and manufacturing overhead cost in a job-order costing system.
  3. Apply overhead cost to Work in Process by use of a predetermined overhead rate.
  4. Compute any balance of under- or overapplied overhead cost for a period, and prepare the journal entry needed to close the balance into the appropriate accounts.
  5. Explain the effects of over- and underapplied overhead on the financial statements.

Demonstrate assigning manufacturing costs to manufactured good by process costing.
Objectives:
  1. Explain the major similarities and differences between job-order and process costing.
  2. Record the flow of materials, labor, and overhead through a process costing system.
  3. Compute the equivalent units of production in a process costing system for a period by the weighted-average method.
  4. Prepare a quantity schedule for a period by the weighted-average method.
  5. Compute the total and unit costs for a period by the weighted-average method.
  6. Prepare a cost reconciliation for a period by the weighted-average method.
  7. Prepare a production report.

Analyze cost behavior to predict how costs will respond to changes in activity levels.
Objectives:
  1. Identify example of variable costs, and explain the effect of a change in activity on both total variable costs and per unit variable costs within the relevant range.
  2. Identify examples of fixed costs, and explain the effect of a change in activity on both total fixed costs and fixed costs expressed on a per unit basis within the relevant range.
  3. Distinguish between committed and discretionary fixed costs.
  4. Analyze a mixed cost using the high-low method.
  5. Analyze a mixed cost using the scattergraph method.
  6. Compare methods used to analyze a mixed cost, including the least-squares regression method.
  7. Prepare an income statement using the contribution format.

Find the most favorable combination of variable costs, fixed costs, selling price, sales volume, and mix of products sold.
Objectives:
  1. Explain how changes in activity affect contribution margin and net income.
  2. Compute the contribution margin ratio (CM ratio), and use it to compute changes in contribution margin and net income.
  3. Show the effects on contribution margin of changes in variable costs, fixed costs, selling price, and volume.
  4. Compute the break-even point and target profit analysis.
  5. Explain a cost-volume-profit (CVP) graph, and explain the significance of each of its components.
  6. Compute the margin of safety and explain its significance.
  7. Explain the break-even point for a multiple product company, and explain the effects of shifts in the sales mix on contribution margin and the break-even point.

Demonstrate activity-based costing systems.
Objectives:
  1. Explain the uses and advantages of activity-based costing.
  2. Describe activity-based costing, and explain how it differs from more conventional costing methods.
  3. Compute the cost of a unit of product using activity-based costing.
  4. Describe the organization, content, and uses of a quality cost report.
  5. Explain the flow of costs in an activity-based costing system.

Demonstrate a working knowledge of standard costs and variances.
Objectives:
  1. Distinguish between ideal standards and practical standards.
  2. Explain how direct materials standards and direct labor standards are set.
  3. Enumerate the advantages and disadvantages of using standard costs.
  4. Compute the direct materials price and quantity variances, and explain their significance.
  5. Compute the direct labor rate and efficiency variances, and explain their significance.
  6. Explain how the manager would determine whether a variance constituted an "exception" that would require his or her attention.

Demonstrate the master budget and its components.
Objectives:
  1. Prepare a master budget and the components involved.
  2. Use the master budget to explain the importance and use of planning to manage costs in an organization.

Demonstrate flexible budgets and overhead analysis.
Objectives:
  1. Prepare a flexible budget, and explain the advantages of the flexible budget approach over the static budget approach.
  2. Use the flexible budget to prepare an overhead performance report containing spending variances.
  3. Explain how flexible budgets can be used in a company that employs activity-based costing.
  4. Compute and properly interpret the fixed overhead budget and volume variances.
  5. Explain how variances can be presented on the income statement for management's use.

Demonstrate segment reporting and related decision-making.
Objectives:
  1. Prepare a segmented income statement using the contribution format.
  2. Use the segmented income statement for decision-making.
  3. Compute and use ROI for decision-making.




1961 Delta Road, University Center MI 48710 | 989-686-9000 | info@delta.edu
Delta College is an Equal Opportunity Organization, committed to excellence through inclusiveness and diversity.
Copyright ©