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Course Outline

This document provides an outline for the "Cost Management" course offered at the Indian Institute of Management Calcutta in Term II. The objectives of the course are to enable students to use cost information as a managerial tool for decision making. Over the course, students will learn fundamental cost concepts, traditional and modern cost accounting methods, and tools for planning, control and decision making like budgeting, variance analysis, and activity-based costing. Evaluation will include quizzes, assignments from the textbook, and an exam.

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Ravi Kumar
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62 views

Course Outline

This document provides an outline for the "Cost Management" course offered at the Indian Institute of Management Calcutta in Term II. The objectives of the course are to enable students to use cost information as a managerial tool for decision making. Over the course, students will learn fundamental cost concepts, traditional and modern cost accounting methods, and tools for planning, control and decision making like budgeting, variance analysis, and activity-based costing. Evaluation will include quizzes, assignments from the textbook, and an exam.

Uploaded by

Ravi Kumar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Indian Institute of Management Calcutta Course Title: Cost Management Area: Finance and Control Term II, Credit:

1.5 Program: PGP, 2012-13

Course Instructors: Prof. Bhabatosh Banerjee, Prof. Manju Jaiswall, Prof. Arpita Ghosh Course Objective: Managing an organization involves carrying out activities like planning, directing and controlling. Each of these activities involve decision making. Cost Management deals with analyzing cost information for planning, control and decision making. The objective of this course is to enable students use cost information as a managerial tool for better and informed decision making in a dynamic business environment. Relationship of the course with overall programme objective and related courses: In Corporate Financial Reporting (Term I), students have learned how financial information are generated and reported mainly for external users. The cost management course floated in Term II helps students develop skills for a companys internal decision making. The effectiveness of cost management approaches helps to improve overall company performance. The two disciplines are, in many respects, interrelated and complementary. Expected Outcome: At the end of the Course, students should be able to: Understand the fundamental cost concepts, cost behaviour, cost flows and be able link these to external financial reporting. Learn measurement and allocation of costs in traditional cost accounting methods like job costing, process costing and be aware of the limitations of the methods. Measure the interrelationship between the costs, volumes and profits. Apply modern decision making tools like Activity Based Costing and Target Costing. Identify costs and benefits which are relevant or irrelevant in a decision making scenario involving competing choices. Learn how budgets are prepared to plan for future performance, what is meant by budgetary slack. Use control techniques like variance analysis and management by exception for planning and control. Text Book: Text: Ronald W. Hilton, Managerial Accounting: Creating Value in Dynamic Business Environment, Tata McGraw-Hill, 9th Edition Reference: Horngren, Datar, Foster, Rajan & Ittner, Cost Accounting A Managerial Emphasis, Pearson, 13th Edition. Pedagogy: The course would be conducted through lectures and discussions based on Power Point presentations, Assignments and Case Discussions. It is important that students check their Moodle account for any announcements or materials for this course. Any modifications to this
outline will be posted on Moodle.

Evaluation: Quizzes (2 Announced) : Course End Exam: Online Assignments:

30% 60% 10% 1

All assignments are from the text book. Session 1 Introduction Readings Chapters 1,2,6 Assignments 2-41, 2-43, 2-56, Case 2-60 1. Understand the need for cost management 2. Learn the cost terms and concepts - Cost, Cost Object, Cost Centre, Cost Unit 3. Ability to classify costs based on - Element, Function, Behaviour 4. Preparing Schedule of Cost of goods manufactured and Schedule of COGS and Income Statement Product Costs : Job Costing Readings Chapters 3,17 Assignments 3-42, 3-48, 3-61, 17-24, 17-25 1. Flow of costs 2. Overhead allocation 3. Under-applied/ Over-applied overheads 4. Allocation of Service department costs Cost-Volume-Profit Relationships Readings Chapters 7, 8 Assignments 7-39, 7-48, 7-53, 8-21 1. Understand the assumptions underlying CVP relations 2. Basic CVP relationships, Contribution Income Statement 3. Apply CVP for Break Even analysis (BEP, MOS) (including multi-product environment) 4. Degree of Operating Leverage 5. Absorption Costing and Variable Costing - Reconciliation Relevant Costs for decision making Readings Chapter 14 Assignments 14-46, 14-56, 14-49, 14-47, 14-44 Case: Prestige Telephone Company 1. Identify Relevant Costs and Revenues 2. Whether to accept special order idle capacity 3. Make or Buy decision 4. Shut down or Continue decision 5. Product-mix decision when resources are constrained Product Costs: Process Costing Readings Chapter 4 Assignments 4-29, 4-30, 4-35 1. Equivalent Units of Production Weighted average method, FIFO method 2. Cost Allocation : Joint Products, By-Products Activity Based Costing (ABC) Readings Chapter 5 Assignments 5-47, 5-55, 5-56 Case: Classic Pen Company 2

Learning Goals

Session 2

Session 3

Learning Goals

Session 4

Learning Goals

Session 5

Learning Goals

Session 6 and 7

Learning Goals

Session 8

Learning Goals

Session 9

1. Problems of Traditional Costing System 2. Cost Analysis, Cost pools, Cost drivers, Activity Rate 3. Non-Value added activities and costs 4. Comparison of Traditional and ABC Product costs Budgeting Readings Chapters 9,11 Assignments 9-34, 9-48, 11-30, 11-43 1. Role of Budget, Budgeting Process, Budgetary slack, Participatory budgeting 2. Cash Budget 3. Master Budget 4. Static and Flexible Budgets Standard costing and Variance Analysis (Cost Variances) Readings Chapters 10,11 Assignments 10-44, 10-46, 10-47, 11-26, 11-49 1. Standard Cost and Standard Costing 2. Direct and Indirect Variances: Material, Labour, Overheads 3. Management by Exception 4. Responsibility for variances Responsibility Accounting, Pricing Readings Chapter 12, 13, 15 12-44, 13-40,13-41,13-42, 15-41,15-47 1. Responsibility Centres 2. ROI versus RI 3. Target Costing 4. Pricing

Learning Goals

Session 10

Learning Goals

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