Cost Accounting




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Course Name : Cost Accounting

Code(Credit) : CUTM1950

Course Objectives

  • The course aims to develop understanding among learners about contemporary cost concept and rational approach towards cost systems and cost ascertainment.
  • The course also aims to provide knowledge about various methods of cost determination under specific situations and to acquire the ability to use information determined through cost accounting for decision making purpose.

Learning Outcomes

  • After completion of the course, learners will be able to:
    • Determine various types of cost of production;
    • Compute Module cost and total cost of production and prepare cost statement;
    • Compute employee cost, employee productivity and employee turnover;
    • Determine cost under job costing, batch costing, process costing, contract costing and service costing;
    • Apply activity-based costing for cost determination.


Course Syllabus

Unit 1: 

Concept and Nature of Cost Accounting

Concept of cost and costing, Importance and features of costing, Cost classification, Concept of cost unit, cost center, meaning of ‘unit’ from the view point of producer, Establishment of an ideal cost accounting system, Cost Reduction, Cost Control, Installation of Costing System, Application of IT in Cost Accounting.

Preparation of Cost Sheet for manufacturing and service sector.

Material Cost

Direct and indirect material, Valuation of materials, Principles of valuation of material as per AS- 2/ Ind AS- 2; CAS- VI, Material control, purchases, Objectives and functions of purchase department, Inventory control: Meaning and techniques including latest techniques like Just in Time (JIT) Inventory Management, Kanban, Kaizen, Determination of Economic Order Quantity (EOQ). Inventories Valuation: Meaning. Significance of inventory valuation. Methods of computing inventory: FIFO, LIFO and Weighted Average.

Treatment of waste, scrap, spoilage, defective and obsolesce.

Unit 2: 

Employee Cost and Overheads

Meaning and classification of employee cost, Requisite of a good wage and incentive system, Time and piece rate plans, Profit sharing, Employee productivity and cost. Labor cost control – techniques, Employee turnover, Remuneration and Incentive schemes (Rowan & Halsey Plan only).

Overheads: Definition and classification, Production overheads – allocation and apportionment of cost, Meaning and Methods of cost absorption, Treatment of over- absorption& under-absorption of overheads, Administration and selling & distribution overheads – methods of ascertainment, Treatment of Research & Development cost in Cost Accounting.


Unit 3:  Methods of Costing: Job Costing, Batch Costing and Process Costing

Meaning of Job Cost, its application and accounting, Preparation of Job cost sheet. Meaning

of Batch Cost and its application in today’s industry.

Meaning and application of process costing, Methods of determination of cost in process costing, Normal and abnormal loss and gain, Inter process costing and profit ascertainment. Choice between process and job costing.

Unit 4: 

Methods of Costing: Contract Costing, Service Costing

Meaning, features and types of contract, Methods of cost determination in contract costing, Escalation clause and cost-plus contract.

Meaning and scope of service costing, Factors in ascertaining service cost, Ascertainment of service cost of following services: Transport, Hospital, Canteen, Hotel.


Unit 5: 

Activity Based Costing (ABC)

Concept, significance and salient features; Stages and flow of costs in ABC; Basic components of ABC - resource drivers and cost drivers; Application of ABC in a manufacturing organisation and service industry.




Books Recommended:


  1. Banarjee, B. (2014). Cost Accounting – Theory and Practice. New Delhi: PHI Learning Pvt. Ltd.
  2. Kishor, R. M. (2019). Taxman’s Cost Accounting. New Delhi: Taxmann Publication Pvt. Ltd.
  3. Lal, J., & Srivastava, S. (2013). Cost Accounting. New Delhi: McGraw Hill Publishing Co.
  4. Mowen, M. M., & Hansen, D. R. (2005). Cost Management. Stanford: Thomson.
  5. Study Material of CA Course (New) Intermediate Level Paper 3: Cost and Management Accounting.

Session Plan

Session 3

Concept of cost unit, cost center, meaning of ‘unit’ from the view point of producer, Establishment of an ideal cost accounting system,

link: 3.pdf

cost accounting Paper-8-New

Session Plan

Session 4

Session Plan

Session 5

Ideal Costing System, Cost Reduction, Cost Control, Installation of Costing System

Link: 5.pdf


cost accounting Paper-8-New

Session Plan

Session 7

Meaning and Definition of Materials, Material cost and Valuation of Materials

Link: 7.pdf

cost accounting Paper-8-New

Session Plan

Session 8

Session 9

Session 10

Session 11


Session 12

Meaning and classification of employee cost, Requisite of a good wage and incentive system

Link: 1.pdf

Session 13

Wage and Incentive System, Time and Piece Rate Plans, Profit Sharing, Employee
Productivity and Cost

Link: 2.pdf

Session 14

Labor cost control – techniques, Employee turnover

Link: 3.pdf

Session 15

Incentive Plan, Halsey Premium Plan

Link: 4.pdf

Session 16

Overheads: Meaning, Classification, Function

Link: 5.pdf

Session 17

Session 18


Link: 7.pdf

Session 19

Treatment of Research and Development cost in Cost Accounting

Link: 8.pdf


Session 20

Case Studies

Case Studies

Our Main Teachers

Dr. Mahapatra is working as an Assistant Professor (Finance) at Centurion University of Technology & Management. She holds a master’s degree in finance from Ravenshaw university. After that she did her Master in Philosophy degree (M.Phil. in Management) from Ravenshaw University. She has also completed her Ph.D. in Commerce from Ravenshaw University. She has more […]