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Cost Accounting Essay

1364 words - 6 pages

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□ Ph.D (Accounting). Universidad de Sevilla.

Last version, November 2006


A cost accounting system collects and classifies costs and assigns them to cost objects. The goal of a cost accounting system is to measure the cost of designing, developing, producing (or purchasing), selling, distributing, and servicing particular products or services. Cost allocation is at the heart of most accounting systems. Cost behavior -how ...view middle of the document...

As future managers, students of the IMBA program should be aware of these possibilities. In particular, students should learn about the extent to which costing systems can affect the behaviour of organizational members. For example, depending on the values enshrined in performance measurement systems organizational members will direct their behaviour in one or another direction. In this respect, students should learn about the immense potentials of costing systems to convey ethical values to organizational members. Consequently, the ethical dimension constitutes a major issue in the cost accounting course, which will be addressed in cases and exercises.


The course schedule is as follows (chapters and coded requirements refer to the course’s textbook –Horngren, Foster and Datar (2006). 12th edition):

1. Course overview, policies, and grading.
2. The need for managerial accounting;
3. Elements of management control;
4. Costs, benefits and context;
5. New management themes around the globe
Case Required: Ecoservicios, S.L. (available on Blackboard).
Chapter 1.

• General cost classifications;
• Direct vs. indirect costs;
• Cost drivers and cost management;
• Cost classification for cost behavior;
6. Total costs and unit costs;
7. Manufacturing costs.

Chapter 2
Required: (2-22), (2-26) (2-37).
Case Required: Daniel Dobbins Distillery, Inc. (HBSP -9-189-065)

8. The building block concept of costing systems;
9. Job costing and process costing;
10. Job-order costing in manufacturing;
11. Job-order costing- normal costing;
12. Budgeted indirect costs.

Chapter 4
(4-18) (4-22),
(4-30), (4-40).
Case Required: Wheeled coach (Case in Chapter 4).


• Denominator level capacity concepts;
• Fixed capacity analysis;
13. Downward demand spiral.

Chapter 9 Part II (pp. 309-317)
Required Case: The “Terminus” Hotel (available on Blackboard)


14. Purpose of cost allocations;
15. Cost-benefit issues and other contextual factors;
16. Allocating costs from one department to another.

Chapter 14 (pp. 492-501)
Required: (14-27)
Required Case: Nantucket Nectars (Case in Chapter 14)

SESSIONS 8, 9, & 10
17. Undercosting and overcosting;
18. Product cost cross-subsidization
19. Refining a cost system;
20. Activity-Based-Costing (ABC);
21. Cost hierarchies;
22. Traditional vs ABC approach to designing a cost system.

Chapter 5
Required: (5-28, 29 & 30)
Required Case: Siemens (HBSP -9-189-089).
Required: (5-25 & 37). Colombo Frozen Yogurt (Case in Chapter 5)
Read 5-35 for class discussion

23. Actual, normal and standard costing.
Chapters 6, 7and 8

No requirements

24. Overview of variable and absorption costing;
25. Capsule comparison of stock costing methods;
26. Performance measures and absorption costing;
27. Effect on...

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