PRINCIPLES OF COST ACCOUNTING

WAEC SYLLABUS ON PRINCIPLES OF COST ACCOUNTING

AIMS AND OBJECTIVES

The aims of this examination are to test candidates’ ability to:
(a) assemble, analyze and ascertain the cost of producing and procuring goods andservices;

(b) develop skills for using Cost Accounting as a tool for assisting management withinformation needed for planning, control and decision making;

(c) show awareness of economic use of resources through costing techniques;

(d) demonstrate knowledge of basic methods of presenting cost statements.

SCHEME OF EXAMINATION

There will be two papers, Papers 1 and 2, both of which will be a composite paper to betaken at one sitting.

PAPER 1:

Will consist of fifty multiple-choice objective questions all of which must beanswered within 1 hour for of 25 marks.

PAPER 2:

Will consist of nine essay-type questions. Candidates will be required toanswer five questions within 2 hours for 75 marks.The paper will consist of two sections, Sections A and B as follows:

Section A:

Theory of Principles of Cost Accounting - four questions will beset and candidates will be required to answer two of them for 15marks each.

Section B:

Practices of Principles of Cost Accounting – five questions willbe set and candidates will be required to answer three of themfor 15 marks each.


DETAILED SYLLABUS

TOPICSNOTES

1. INTRODUCTION TOCOST ACCOUNTING

1.1 Definitionand objectives ofCostAccounting.
1.2 Functions and importance of CostAccounting
1.3 Differences among Cost Accounting,Management Accounting andFinancial Accounting.
1.4 Basic Costing terminologies e.gCost Centre, cost unit, unit costetc.

2. CHARACTERISITICSOF A GOOD COSTING SYSTEM

2.1 Characteristics of a goodCostingSystem e.gsimple, relevant, accurate,cost-effective etc
2.2 Qualities of good Cost informatione.g brief, timely, comparable,objective etc.

3. COST CLASSIFICATIONAND TYPES OF COST

3.1 Basis of cost classification:Classification of cost according tobehaviour, function, nature etc.
3.2 Types of cost under variousClassifications eg. direct cost,indirect cost, period cost,historical cost, sunk cost, etc.
3.3 Components of cost build-up forascertaining the cost/profit of aproduct or an activity e.g prime cost,overheads, factory cost, cost ofproduction, cost of sales, total cost etc.

4. ELEMENTS OF COST

4.1 Explanation of elements of cost i.eMaterial, Labour and Expenses.
4.2 Identification and grouping ofelements of cost into direct andindirect costs e.g direct materialcost direct, labour cost, directexpenses and overheads such asfactory, administration, selling anddistribution, etc.

5. MATERIALS

5.1 Purchasing, receiving, storage andtheir documentation.
5.2 Stocktaking: periodic and continuousand perpetual inventory system.
5.3 Inventory control – Minimum,Maximum, Re-order stock levels andEconomic Order Quantity.(computation of Economic OrderQuantity is not required).
5.4 Pricing of issues and Stock valuationusing FIFO, LIFO,Simple Average,Weighted Average,Standard Price methods and their advantages anddisadvantages.

6. LABOUR

6.1 Labour: Meaning and types of labourand labour cost:- skilled and unskilled.- direct and indirect.

6.2 Methods of labour remuneration:
- Time rate
- Piece rate: straight piece rate,differential piece rate, price rate withguaranteed time rate.
- incentive schemes: premium bonus,overtime premium.

6.3 Methods of time keeping andconcept of idle time.

6.4 Payroll procedures:-Preparation of wages analysis sheet
-statutory and non-statutory deductionsshould be emphasized. (questions willbe limited to computation of individualbonus schemes).

6.5 Labour Turnover: Meaning, causes andcost.
-Labour turnover ratio.

7. OVERHEADS

7.1 Definition of overheads.
7.2 Types of overheads.
7.3 Overhead analysis, collection,classification, allocation, apportionmentand redistribution.
7.4 Overhead Absorption:- Calculation of OverheadAbsorption Rates (OAR) e.gDirect Wages Percentage, DirectMaterial Cost Percentage,Machine Hour Rate, PrimeCost percentage, etc.
7.5 Application of Overhead AbsorptionRates.
7.6 Calculation of under/over absorption ofoverheads.
7.7 Activity Based Costing:
7.7.1 Meaning, advantages and disadvantagesof Activity Based Costing (ABC).7.7.2 Steps in Activity Based Costing.
7.7.3 Differences between Activity BasedCosting and Traditional Product Costingsystems.
- limitations of Traditional ProductCosting System.
7.7.4 Computation of product cost usingActivity Based Costing.

8. COSTING METHODS
8.1 Job/Batch Costing

8.1.1 Purpose and circumstances underwhich Job/Batch Costing is applied.
8.1.2 Ascertainment of cost of a job or batch.

8.2 Contract Costing

8.2.1 Meaning and characteristics.
8.2.2 Preparation of Contract Accountsand Contractee’s Account.

8.3 Service Costing

8.3.1 Meaning and objectives of ServiceCosting.
8.3.2 Organizations that use Service Costing.
8.3.3 Ascertainment of cost per unit ofservices rendered.

8.4 Process Costing

8.4.1 Explanation and circumstance whereprocess costing is applied
8.4.2 Terminologies in process costing e.gjoint-products, by-products, scrap,waste, etc.
8.4.3 Preparation of process accountsincluding Normal loss, AbnormalLoss and Abnormal gain.

9.0 COSTING TECHNIQUES
9.1 Marginal and Absorption Costing

9.1.1 Meaning anddistinctionbetween Marginal and AbsorptionCosting.
9.1.2 Terminologies used in Marginal andAbsorption Costing - fixed cost, variablecost, semi-variable costs, contribution,period and product costs. etc.
9.1.3 Preparation of Income Statement usingboth Marginal and Absorption costing.

9.2 Break Even Analysis

9.2.1 Meaning, importance, assumptions andlimitations of break-even analysis.
9.2.2 Computation of break-even points inunits and values from given dataincluding segregation of costs ( usinghigh and low method).
9.2.3 Preparation and interpretation ofbreak-even charts.

10.0 BUDGETING AND BUDGETARYCONTROL

10.1 Explanation of basic terminologies inBudgeting and Budgetary control.
10.2 Budgeting process and Administration.
10.3 Importance of Budgeting andBudgetary control.
- Preparation of budgets will be limitedto cash sales, material usage, materialpurchase and production budgets.
10.4 Functional budgets:
- Sales, production, capital expenditure,etc.
10.5 Cash budget and master budget.

11.0 STANDARD COSTING

11.1 Meaning and importance of StandardCosting
11.2 Types of Standards.
11.3 Computation of variances:
● Material (price and usage)
● Labour (rate and efficiency).

12.0 COST ACCOUNTS

12.1 Interlocking cost accounts.
12.2 Preparation of cost ledger accounts.
12.3 Reconciliation of cost and financialprofits.
12.4 Integrated Cost accounts.
12.5 Preparation of ledger accounts andincome statements.

We provide educational resources/materials, curriculum guide, syllabus, scheme of work, lesson note & plan, waec, jamb, O-level & advance level GCE lessons/tutorial classes, on various topics, subjects, career, disciplines & department etc. for all the Class of Learners

A. RECOMMENDED TEXT BOOKS

Cost Accounting - by Harper, W.M - Published by Pitman Publishing Ltd.
Cost Accounting - by T. Lucey - Published by DPP Publications Ltd
Weldon’s Cost Accounting - Published by Macdonald andEvans Ltd. - byOwler, L.W.J and Brown, J.L
Principles of Cost Accounting for - Published by Longmanfor theSenior Secondary Schools in Ghana Ministry of Education, Ghana (1991).
Cost Accounting – by Drury, Colin - Published by Professional HeinemannPublishing.

B. OTHER SUGGESTED LOCAL TEXTS /PAMPLETS/JOURNALS IN GHANA

1. Costing Made Easy – by Kingsford Opoku (Kings Series).
2. Costing for ‘U’ – by Barnabas Dadzie (C for ‘U’ Series).
3. Cost Accounting for Senior HighSchool - by Williams Asamoah Appiah
(AKI-OLA Series)-AKI-OLA Publications, Accra

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