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    CH 1 Fundamentals of Costing

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    ctmursyidah
    This chapter introduces fundamentals of cost accounting and cost management. It aims to explain key concepts of cost accounting, the role of cost information in decision making, and how costs are accumulated, classified, and applied for costing purposes. The instructor will provide an overview of cost accounting and cost management, comparing traditional and strategic approaches. Students will learn about ascertaining costs, costing methods and techniques, and accounting for costs.

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    CH 1 Fundamentals of Costing

    Uploaded by

    ctmursyidah
    25 views3 pages
    This chapter introduces fundamentals of cost accounting and cost management. It aims to explain key concepts of cost accounting, the role of cost information in decision making, and how costs are accumulated, classified, and applied for costing purposes. The instructor will provide an overview of cost accounting and cost management, comparing traditional and strategic approaches. Students will learn about ascertaining costs, costing methods and techniques, and accounting for costs.

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    Ch 1 Fundamentals of Costing

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    This chapter introduces fundamentals of cost accounting and cost management. It aims to explain key concepts of cost accounting, the role of cost information in decision making, and how costs are accumulated, classified, and applied for costing purposes. The instructor will provide an overview of cost accounting and cost management, comparing traditional and strategic approaches. Students will learn about ascertaining costs, costing methods and techniques, and accounting for costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    25 views3 pages

    CH 1 Fundamentals of Costing

    Uploaded by

    ctmursyidah
    This chapter introduces fundamentals of cost accounting and cost management. It aims to explain key concepts of cost accounting, the role of cost information in decision making, and how costs are accumulated, classified, and applied for costing purposes. The instructor will provide an overview of cost accounting and cost management, comparing traditional and strategic approaches. Students will learn about ascertaining costs, costing methods and techniques, and accounting for costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Fundamentals of Costing

    Instructor’s Manual

    CHAPTER Fundamentals of
    ONE Costing

    The cost of a thing is that amount of life which must be exchanged for it.
    Henry David Thoreau

    Learning Outcomes
    The study of this chapter should enable students to:
     explain the concepts, principles, methods and techniques of cost
     discuss the role of cost and information systems
     describe how cost is accumulated, classified and applied for purposes of costing, planning and
    control
     identify the position of the accountant
     provide an overview of cost accounting and cost management
     recognize the critical role cost accounting plays in an organization

    Instructor’s Focus
    ❏ Introduce, describe and explain:
    ¤ cost accounting;
    ¤ costs;
    ¤ cost management;
    ¤ costing system;
    ¤ relationship with financial and management accounting;
    ¤ concepts, principles and conventions of costs;
    ¤ classification and behavior of costs;
    ¤ accounting for costs;
    ¤ cost statements;
    ¤ costing methods and techniques, and
    ¤ strategic cost accounting.
    Instructor’s Manual
    2

    ❏ Present a conceptual overview of cost accounting and cost management as shown in Figure 1.1

    ASCERTAINING COSTS
    Accumulating & Product costing
    Classifying
    Method:
    Apply: Specific order
    Costing principles Process
    C
    Costing conventions Techniques:
    O Cost estimation absorption/marginal
    Budgetary/
    S standard
    Accounting
    T for Costs Making product
    Integrity Information Making profit
    Integrated
    A Interlocking For:
    Traditional
    Decision-making
    C function INTERNAL (tactical)
    OPERATION Planning control
    C Competence
    O EXTERNAL MANAGING COSTS
    ENVIRONMENT
    U Strategic Accumulating Cost
    function Strategic Information management
    N Ethical
    T Both: Market
    Financial Customer
    A Non-financial Competitors Winning &
    Apply: retaining
    N customers
    Balanced scorecard Information
    T
    For:
    Accounting for Strategic
    Strategic Information decision-making

    Figure 1.1  Conceptual overview of cost accounting and cost management

    ❏ Present a comparison of cost accounting and cost management as shown in Figure 1.6.
    Strategic Cost Management Traditional Cost Accounting

    Approach Approach

    Managing costs Planning and control

    Information Information
    Financial and non-financial Financial

    Focus Focus

    External: markets, customers, Internal: business operations


    competitors

    Goal Goal
    Winning and retaining customers Making products and making
    company profitable

    How to achieve? How to achieve?

    1 Value chain analysis 1 Material, labour and overhead


    2 Strategic position analysis costing
    3 Cost driver analysis 2 Costing methods
    3 Costing techniques

    Figure 1.6  Strategic cost management and traditional cost accounting compared
    Fundamentals of Costing
    3

    ❏ Conclude with a discussion of the strategic approaches in a changing environment, that is risk
    management and enterprise management.
    ❏ End with an attempt of the structured questions and multiple choice questions.

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