CAPE ACCOUNTING UNIT 2 Topic 1 Introd

CAPE ACCOUNTING UNIT 2
MODULE 1: COSTING PRINCIPLES
CONTENT: Cost and Management Accounting, Manufacturing Enterprises, Elements of Cost
1. INTRODUCTION TO COST AND MANAGEMENT ACCOUNTING
i.
Discussing the importance and role of Cost Accounting and Management Accounting ii. Differentiating between Cost and Management Accounting and Financial Accounting iii. Discussing the role of Cost and Management Accounting and service industries
2. ACCOUNTING FOR MANUFACTURING ENTERPRISES
i.
Flow of costs
i. Cost of goods manufactured ii. Cost of goods sold
3. ELEMENTS OF COST
Cost classification
i.
i. Inventory valuation ii. Decision making iii. Planning and control iv. Sketching fixed, variable and mixed cost curves ii. Raw Material costs
i. Procurement function ii. Calculating Economic order quantity (EOQ) iii. Inventory or stock valuation valuations using Last In First Out (LIFO), First In
First Out (FIFO) and average costs (AVCO) iv. Disposal of hazardous materials iii. Labour Costs
i. Direct and indirect labour ii. Remuneration (piece rate, hourly rate, commissions, fixed salary and combinations of these) iii. Changes in labour costs in light of technological advances iv. Overhead Costs
i. Types of overhead expenses (fixed and semi-fixed) ii. Apportionment of overhead costs
1. Basis for the apportionment
2. Calculation of predetermined overhead recovery rates using machine and labour costs iii. Service costs allocation
1. Direct and reciprocal

1. INTRODUCTION TO COST AND MANAGEMENT ACCOUNTING
A. INTRODUCTION
Accounting information serves three different functions
I.
To provide information to external parties such as shareholders, creditors, government and other regulatory bodies to enable them to assess management performance and assist them in investment and credit decisions. (DISCUSSION)
II. To estimate cost of product and services produced by a business
III. To provide information to internal users, such as, managers to enable them to plan, control and make decisions