Cost Accounting Diploma KNEC Notes

Introduction to the Module Unit

Cost Accounting is a unit offered to diploma students in business related courses to equip them with the right attitudes, knowledge and skills to be able to ascertain costs and prepare performance reports in a business context.

General Objectives

By the end of this module unit, the learner should be able to:

• Apply costing concepts in a business management
• Cost goods and services using various costing methods
• Price goods and services using various pricing methods
• Carry out cost allocation for various overheads
• Apply simple costing techniques as used in modern business setups.

Topics/Course Outline Required by KNEC

Topic 1: Introduction to Cost Accounting

1.1. Nature of cost accounting

1.2. Importance of cost accounting

1.3. Basic terms used in cost accounting

1.4. Principles of cost accounting

1.5. Distinction between cost accounting and financial accounting

1.6. Characteristics of effective cost accounting system

1.7. Duties of a cost accountant

Topic 2: Elements of Cost and Cost Behaviour

2.1. Elements of costs of a product

2.2. Cost classification

2.3. Importance of cost information

2.4. Cost statement format

Topic 3: Material Costing

3.1. Stock taking methods

3.2. Control procedures

3.3. Aspects

3.4. Stock valuing methods

3.5. Methods of valuing materials issues

3.6. Stores ledger/account format

Topic 4: Labour costing

4.1. Meaning of labour costs

4.2. Ascertainment of labour costs

4.3. Classification of labour costs

4.4. Methods of calculating labour costs

4.5. Calculation of labour costs using labour costs methods

4.6. Payroll format

Topic 5: Costing for Overheads

5.1. Meaning of overhead

5.2. Overheads expenses

5.3. Distinction between allocation, apportionment and absorption

5.4. Classification of overhead expenses into their respective categories

5.5. Overhead analysis sheet format

5.6. Calculation of overhead absorption rates

Topic 6: Process Costing

6.1. Definition of process costing

6.2. Elements of process costing

6.3. Process account format

6.4. Abnormal loss account format

6.5. Normal loss account format

6.6. Scrap debtor account

6.7. Finished goods stock account

6.8. Work-in-progress calculation

6.9. Statement of equivalent production format

Topic 7: Contract Costing

7.1. Definition of contract costing

7.2. Features of contract costing

7.3. Preparation of contract account

7.4. Preparation of contractee account

Topic 8: Batch Costing

8.1. Definition of batch costing

8.2. Procedures of preparation of batch statements

Topic 9: Factory Job Costing

9.1. Nature of factory job costing

9.2. Procedures in factory job costing

9.3. Job cost card layout

9.4. Cost estimates

Topic 10: Service Costing

10.1. Nature of service costing

10.2. Common costs units in service costing

10.3. Preparation of operations cost statement

Topic 11: Emerging Issues

11.1. Emerging trends and issues in cost accounting

11.2. Challenges posed by the emerging trends and issues

11.3. Ways of coping with the emerging trends and issues