Cost Accounting

Syllabus Sections

Publish Date

07/11/2012 19:37:40

Cost Accounting


Summer 2012
05/29/2012 - 08/15/2012

Course Information

Section 001
W 17:40 - 21:40
RVSG 9113
David Floyd

Office Hours

  • M T W Th
    9:00 - 11:00
    South Austin
  • W
    3:40 - 5:30

Course Requirements

Cost Accounting

Course Syllabus


Instructor: David Floyd, CPA, MSA

Class Meetings:

Classroom: RVS, Room # 9137

Office Room:  Campus: RVS, Building: G, Room 9145

Office Hours


Telephone #: 512-223-6355


Course Description:
A study of budgeting and cost control systems including a detailed study of manufacturing cost accounts and reports, job order costing, and process costing. Includes introduction to alternative costing methods such as activity-based and just-in-time costing. Reviews planning of profit, cost, sales, cost and profit analysis, profit performance, and measurements. Skills: B Prerequisites: ACCT 2302 or equivalent. If you have not completed ACCT 2302 (or its equivalent), you will not be able to take ACNT 2309.

Required Texts/Materials:
For required texts/materials, go to

 Instructional Methodology:
The objectives of this course will be met by incorporating a variety of instructional methods. These include lecture, case studies, group activities, student presentations, research papers, and/or online accounting and tax database research, periodical research.







Course Objectives:



Chapter 1:

  • Distinguish financial accounting from management accounting
  • Understand how management accountants affect strategic decisions
  • Describe the set of business functions in the value chain and identify the dimensions of performance that customers are expecting of companies
  • Explain the five-step decision-making process and its role in management accounting
  • Understand how management accounting fits into an organization’s structure
  • Understand what professional ethics mean to management accountants

Chapter 2

  • Define and illustrate a cost object
  • Distinguish between direct costs and indirect costs
  • Explain variable costs and fixed costs
  • Interpret unit costs cautiously
  • Distinguish inventoriable costs from period costs
  • Explain why product costs are computed in different ways for different purposes
  • Describe a framework for cost accounting and cost management

Chapter 3:

  • Explain the features of cost-volume-profit (CVP) analysis
  • Determine the breakeven point and output level needed to achieve a target operating income
  • Understand how income taxes affect CVP analysis
  • Explain how managers use CVP analysis in decision making
  • Explain how sensitivity analysis helps managers cope with uncertainty
  • Use CVP analysis to plan variable and fixed costs
  • Apply CVP analysis to a company producing multiple products

Chapter 4:

  • Describe the building-block concepts of costing systems
  • Distinguish job costing from process costing
  • Describe the approaches to evaluating and implementing job costing systems
  • Outline the seven-step approach to normal costing
  • Distinguish actual costing from normal costing
  • Track the flow of costs in a job-costing system
  • Dispose of under-or overallocated manufacturing overhead costs at the end of the fiscal year using alternative methods
  • Apply variations from normal costing

Chapter 6:

  • Describe the master budget and explain its benefits
  • Describe the advantages of budgets
  • Prepare the operating budget and its supporting schedules
  • Use computer-based financial planning models for sensitivity analysis
  • Describe responsibility centers and responsibility accounting
  • Recognize the human aspects of budgeting
  • Appreciate the special challenges of budgeting in multinational companies

Chapter 7:

  • Understand static budgets and static-budget variances
  • Examine the concept of a flexible budget and learn how to develop it
  • Calculate flexible-budget variances and sales-volume variances
  • Explain why standard costs are often used in variance analysis
  • Compute price variances and efficiency variances for direct cost categories
  • Understand how managers use variances
  • Describe benchmarking and explain its role in cost management

Chapter 8:

  • Explain the similarities and differences in planning variable overhead costs and fixed overhead costs
  • Develop budgeted variable overhead rates and budgeted fixed overhead cost rates
  • Compute the variable overhead flexible-budget variance, the variable overhead efficiency variance, and the variable overhead spending variance
  • Compute the fixed overhead flexible-budget variance, the fixed overhead spending variance, and the fixed overhead production-volume variance
  • Show how the 4-variance analysis approach reconciles the actual overhead incurred with overhead amounts allocated during the period
  • Explain the relationship between the sales-volume variance and the production-volume variance
  • Examine the use of overhead variances in nonmanufacturing settings

Chapter 10:

  • Describe linear cost functions and three common ways in which they behave
  • Explain the importance of causality in estimating cost functions
  • Understand various methods of cost estimation
  • Outline six steps in estimating a cost function using quantitative analysis
  • Describe three criteria used to evaluate and choose cost drivers
  • Explain nonlinear cost functions, in particular those arising from learning curve effects
  • Be aware of data problems encountered in estimating cost functions

Chapter 13:

  • Recognize which of two generic strategies a company is using
  • Understand what comprises reengineering
  • Understand the four perspectives of the balanced scorecard
  • Analyze changes in operating income to evaluate strategy
  • Identify unused capacity and how to manage it

Chapter 15:

  • Distinguish the single-rate method from the dual-rate method
  • Understand how divisional incentives are affected by the choice between allocation based on budgeted and actual rates, and budgeted and actual usage
  • Allocate multiple support-department costs using the direct method, the step-down method, and the reciprocal method
  • Allocate common costs using the stand-alone method and the incremental method
  • Explain the importance of explicit agreement between contracting parties when the reimbursement amount is based on costs incurred
  • Understand how bundling of products gives rise to revenue allocation issues and the methods for doing so

Chapter 16:

  • Identify the splitoff point in a joint-cost situation and distinguish joint products from byproducts
  • Explain why joint costs are allocated to individual products
  • Allocate joint costs using four methods
  • Explain when the sales value at splitoff method is preferred when allocating joint costs
  • Explain why joint costs are irrelevant in a sell-or-process-further decision
  • Account for byproducts using two methods

Chapter 17:

  • Identify the situation in which process-costing systems are appropriate
  • Understand the basic concepts of process-costing and compute average unit costs
  • Describe the five steps in process costing and calculate equivalent units
  • Use the weighted-average method and first-in, first out (FIFO) method of process costing
  • Apply process-costing methods to situations with transferred-in costs

Chapter 20:

  • Identify six categories of costs associated with goods for sale
  • Balance ordering costs with carrying costs using economic-order-quantity (EOQ) decision model
  • Identify the effect of errors that can arise when using the EOQ decision model and ways to reduce conflicts between the EOQ model and models used for performance evaluation
  • Describe why companies are using just-in-time (JIT) systems for manufacturing
  • Identify the features and benefits of a just-in-time production system

Chapter 21:

  • Understand the five stages of capital budgeting for a project
  • Use and evaluate the two main discounted cash flow (DCF) methods:  the net present value (NPV) method and the internal rate-of-return (IRR) method
  • Use and evaluate the payback and discounted payback methods
  • Use and evaluate the payback and discounted payback methods
  • Use relevant cash inflows and outflows for capital budgeting decisions
  • Understand issues involved in implementing capital budgeting decisions and evaluating managerial performance
  • Identify strategic considerations in capital budgeting decisions


















Course Rationale:
The goals and objectives of this course prepare students for (1) obtaining or improving job skills, (2) qualifying for a business or accounting job, (3) achieving job advancement, completing the courses required for the Certified Public Accounting (CPA) exam (a minimum of an undergraduate (4 year) degree is required for the CPA exam), (4) preparing for accounting or business certification exams (CMA, CFA, CGFM, CIA, etc), (5) preparing for a master’s program, (6) working as an entrepreneur, (7) completing degree requirements and/or (8) fulfilling personal goals.

 SCANS Competencies:
The term SCANS is an acronym for the Secretary’s Commission on Achieving Necessary Skills. The U.S. Secretary of Labor commissioned a task force in 1990 to examine the demands of the workplace. The Commissions first report, “What Work Requires of Schools,” identified what employees need to know and be able to do in order to succeed in any occupation.

 The following SCANS COMPETENCIES are incorporated in this course:


A.    Definition: Identifies need for data, obtains them from existing sources or creates them, and evaluates their relevance and accuracy. Completely performing the tasks of acquiring data and evaluating information includes posing analytical questions to determine specific information needs; selecting possible information and evaluating its appropriateness; and determining when new information must be created.


A.    Definition: Employs computers to acquire, organize, analyze and communicate information. Competently using computers to process information includes entering, modifying, retrieving, storing and verifying data and other information; choosing format for display (e.g., line graphs, bar graphs, tables, pie charts, narrative); and ensuring the accurate conversion of information into the chosen format.


A.    Definition: Recognizes that a problem exists (e.g., there is a discrepancy between what is and what should or could be); identifies possible reasons for the discrepancy; devises and implements a plan of action to resolve it; evaluates and monitors progress; and revises plan as indicated by findings.

Scholastic Dishonesty:
The following statement on scholastic dishonesty must be included: Acts prohibited by the college for which discipline may be administered include scholastic dishonesty, including but not limited to cheating n an exam or quiz, plagiarizing, and unauthorized collaboration with another in preparing outside work. Academic work submitted by students shall be the result of their thought, research or self-expression. Academic work is defined as, but not limited to tests, quizzes, whether taken electronically or on paper; projects, either individual or group; classroom presentations, and homework.

 Students with Disabilities:
 The following statement on students with disabilities must also be included: Each ACC campus offers support services for students with documented physical or psychological disabilities. Students with disabilities must request reasonable accommodations through the Office for Students with Disabilities on the campus where they expect to take the majority of their classes. Students are encouraged to do this, three weeks before the start of the semester.

 Course Evaluation/Grading System, How to Reach the Instructor, and Course Outline/Calendar:
Refer to the Instructor’s syllabus for this course.

Course Schedule



Course Coverage



Chapter 1:  The Manager and Management Accounting

Chapter 2:  An Introduction of Cost and Purpose






Chapter 10:  Determining How Cost Behave

Chapter 3: Cost-Volume-Profit Analysis



Chapter 4:  Job Costing

Chapter 17:  Process Costing



Chapter 6:  Master Budget and Responsibility Accounting

In Class Quiz

Testing Center Exam Window Opens (1-4; 10, 17)



Chapter 7:  Flexible Budgets, Direct-Cost Variances, and Management Control

Chapter 8:  Flexible Budgets, Overhead Cost Variances, and Management Control



Chapter 15:  Allocation of Support-Department Cost, Common Cost, and Revenues

Chapter 16:  Cost Allocation:  Joint Products and Byproducts

In Class Quiz

Testing Center Exam Window Open (6-8; 15-16)



Chapter 20:  Inventory Management, Just-in-Time, and Simplified Costing Methods



Chapter 13:  Strategy, Balanced Scorecard, and Strategic Profitability Analysis



Chapter 21: Capital Budgeting and Cost Analysis

In class Quiz



Final Exam (In class)
































2 Case Studies






Budget Project








Basis for Grading:




900 - 1000


800 -  899


700 -  799


600 -  699


Below 599





Attendance: Your attendance is expected at all classes.  Since the exams are a reflection of the material covered in class and the assigned homework and lab problems, it is to your advantage to attend.


Withdrawal: is the last day to withdraw from this class and receive a grade of “W”.  If you wish to withdraw, it is your responsibility to do so.  DO NOT ASSUME THAT I WILL WITHDRAW YOU. I have no obligation to do so.


Incomplete: Incomplete grades are given only on rare occasions at the instructor’s discretion.  Generally, to receive an Incomplete, a student must have completed all examinations and assignments to date, with a satisfactory grade of C or better, and have personal circumstances that prevent course completion that occur after the deadline to withdraw.



BlackboardI maintain a Blackboard site for this class.  You will be able to log onto the Blackboard site http://acconline.austincc.eduto gain access to:


  • Course announcements
  • Syllabus
  • Grade book


Your user name for Blackboard is your ACC eID. This is your 7 digit ACC student ID, preceded by the first initial of your official first name. During the activation of your ACC eID, you will select your password. If you do not know your ACC eID, you may retrieve it via the Blackboard home page.


To use Blackboard, you do not have to have Internet access at home.  Blackboard access is available through any ACC computer.


Exams: The exams will be a multiple choice.  DO NOT MISS EXAMS.  If you must miss an exam, please contact me BEFORE the start of class by email, phone or a note in my mailbox. 


Homework: Homework is a critical part of any accounting course.  Important accounting concepts cannot be fully understood until you work the problems. Since it is worth up to 10% of the final grade, failure to complete homework often affects the grade a student receives.


Homework assignments must be submitted by the beginning of the following class. No late homework will be accepted after the day of the test for the corresponding chapters.