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Cost Accounting
Bestseller
Rating: 4.5 out of 5(91 ratings)
295 students

Cost Accounting

Fundamentals of Cost Accounting - Including Practice Exercises
Bestseller
Created bySyed Muhammad Ali Shah
Last updated 1/2025
English

What you'll learn

  • This course is aimed at providing detailed and comprehensive knowledge on costing techniques including the traditional and modern business environment.
  • Calculate cost of production, cost per unit of product or service or for one department
  • Preparing Budgets
  • Calculating variances and comparing the actual results with the budgeted results

Course content

10 sections • 60 lectures • 15h 54m total length

  • Introduction to Costing8:50

    Cost Accounting and Management Accounting Are Terms Which Are Often Used Interchangeably.

    It is not correct to do so. Cost accounting is a part of management accounting.

    Cost accounting is mainly concerned with:

    • Preparing statements (e.g., budgets, costing)

    • Cost data collection

    • Applying costs to inventory, products and services

    Therefore, management accounting goes beyond cost accounting.

    In general, cost accounting information is unsuitable for decision-making.

    Cost Classification

    Cost accounting is used for:

    1. Preparing statements (e.g., budgets, costing)

    2. Cost data collection

    3. Applying costs to inventory, products and services

  • Fixed and Variable Costs12:41

    Cost Accounting and Management Accounting Are Terms Which Are Often Used Interchangeably.

    It is not correct to do so. Cost accounting is a part of management accounting.

    Cost accounting is mainly concerned with:

    • Preparing statements (e.g., budgets, costing)

    • Cost data collection

    • Applying costs to inventory, products and services

    Therefore, management accounting goes beyond cost accounting.

    In general, cost accounting information is unsuitable for decision-making.

    Cost Classification

    Cost accounting is used for:

    1. Preparing statements (e.g., budgets, costing)

    2. Cost data collection

    3. Applying costs to inventory, products and services

  • Fixed Costs Quiz
  • Direct and Indirect Costs9:25

    Direct Cost vs Indirect Cost

    Direct cost is the cost incurred by the organization while performing their core business activity and can be attributed directly in the production cost like raw material cost, wages paid to factory staff etc., whereas Indirect cost is the cost that cannot be directly attributed to the production as these costs are incurred in general and can be fixed or variable in nature like the office expenses, salary paid to administration, etc.

  • Production Costs24:10

    Production Costs


    - are costs identified with goods produced for resale.

    - are all the costs involved in the manufacture of goods (costs incurred inside the factory)

    For example:

    • Direct material

    • Direct labor

    • Direct expenses

    • Variable production overheads

    • Fixed production overhead

  • Non Production Costs8:28

    Non-Production Costs

    - are not directly associated with production of manufactured goods (costs incurred outside the factory).

    - are taken directly to the income statement as expenses in the period in which they are incurred.

    Such costs consist of:

    • Administrative costs

    • Selling and distribution expenses

    • Finance costs


    • Administrative Costs
      These include all the costs involved in running the general administration department of an organization.
      Examples of administrative costs include:

      • Depreciation of office buildings and equipment.

      • Office salaries, including salaries of directors, secretaries and accountants.

      • Rent, rates, insurance, lighting, cleaning, telephone charges and others.

      Selling Costs
      Selling costs include all costs incurred in promoting sales and retaining customers.
      Examples of selling costs are:

      • Salaries and commission of salesmen and sales department staff.

      • Advertising and sales promotion, market research.

      • Rent, rates and insurance of sales offices and showroom.

      Distribution Costs
      Distribution costs include all costs incurred in making the packed product ready for dispatch and delivering it to the customer.
      Examples of distribution overhead are:

      • Delivery costs

      • Wages of packers, drivers and dispatch clerks.

      • Insurance charges, rent, rates and depreciation of warehouse.

      Finance Costs
      Finance costs include all the costs that are incurred in order to finance an organization, for e.g., loan interest.
      Non-production costs are taken directly to the income statement as expenses in the period in which they are incurred.

  • Warehousing and Transportation Costs7:28

    Functional Costs

    • (a) Production costs are the costs which are incurred by the sequence of operations beginning with the supply of raw materials and ending with the completion of the product ready for warehousing as a finished goods item. Packaging costs are production costs where they relate to 'primary ‘packing (boxes, wrappers and so on).

    • (b) Administration costs are the costs of managing an organization; that is, planning and controlling its operations, but only insofar as such administration costs are not related to the production, sales, distribution or research and development functions.

    • (c) Selling costs, sometimes known as marketing costs, are the costs of creating demand for products and securing firm orders from customers.

    • (d) Distribution costs are the costs of the sequence of operations with the receipt of finished goods from the production department and making them ready for dispatch and ending with the reconditioning for reuse of empty containers.

    • (e) Research costs are the costs of searching for new or improved products, whereas development costs are the costs incurred between the decision to produce a new or improved product and the commencement of full manufacture of the product.

    • (f) Financing costs are costs incurred to finance the business, such as loan interest

  • Functional Costs3:44
  • Functional Costs
  • Functional Cost Quiz 1
  • Functional Cost Quiz 2

Requirements

  • No prerequisites. We start from scratch and move forward in a systematic manner.

Description

Course Overview

Costing is one of the most important and fundamental knowledge area in any business.  The ultimate objective of any business is supposed to be profit and certainly profit is a function of cost.  The success of a business does not solely depend on its revenue but also more importantly on how a business manages its costs. 

Businesses fail not due to lack of revenues but due to uncontrolled costs.  In order to control the business costs it is important to first understand the costs.  Costs lie within products, processes, systems, departments and activities.

What is Included ?

- Types of Costs – Cost Classification
- Cost Behavior
- Material Costs
- Case Study
- Labor Costs
- Costing for Overheads – Absorption Costing
- Case Study
- Marginal Costing
- Job, Batch and Service Costing
- Process Costing
- Case Study
- Costing for Joint and By Products
- Case Study
- Alternative Costing Techniques
- Activity Based Costing – ABC
- Case Study
- Target Costing
- Throughput Accounting
- Case Study
- Life Cycle Costing


About the Instructor

A qualified accounting and finance professional with over twenty years of extensive experience in diversified industry sectors such as auditing, large scale manufacturing and oil and gas.

Like most accounting and finance professionals, I started my career as finance executive and then over the years rose to the position of CFO in a multinational company in oil and gas industry.

I have also worked as a consultant with the World Bank and European Union on different projects in Middle East, Eastern Europe and CIS countries during 2011 to 2018 as a principal consultant for IFRS and Financial Management.

I am qualified professional with three professional qualifications MBA, ACCA and CIMA UK. I have been teaching IFRS, Financial Reporting, Financial Management and Performance Management for over fifteen years and my focus areas are ACCA and CIMA qualifications.

Who this course is for:

  • Accounting and Finance students from ACCA MA, ACCA F2, CIMA, CAT, BBA, MBA as well as other business professionals, managers and entrepreneurs who want to learn costing techniques and profit planning

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