Syllabus of Cost and Management Accounting: 

Cost and Management Accounting is the fifth paper of CAP-II. It covers 100 marks in total. It is the Group 2 paper. The syllabus you need to cover in CAP-II under “Cost and Management Accounting: ” is as follow:

Level of Knowledge : Working

Course objectives

— Required comprehensive knowledge of costing concepts and detailed procedures and documentation involved in cost ascertainment systems.

— Provide an understanding of the application of above knowledge to basic planning, control and decision-making.

Course contents


Cost concepts and costing methods

—  Evolution of cost accounting

—  Definitions

—  Objectives of cost accounting

—  Importance of cost accounting

—  Cost accounting system

—  Cost concepts and elements of costs

—  Types and methods of costing

—  Cost, expenses and loss

— Relationship between cost accounting, financial accounting, management accounting and financial management

—  Classification of costs, Cost centers and cost unit


Material Control

—  Purchasing of materials

—  Receiving of materials

—  Inspection of materials

—  Storage of materials

—  Issuing of materials

—  Maintenance of inventory records

—  Techniques of material control

—  Pricing methods

—  Stock valuation material losses

—  Treatment of normal loss and abnormal loss of materials

—  Accounting of waste, scrap, spoilage and defectives

—  Just In Time (JIT)

—  Material Requirement Planning (MRP)


Labour Control

—  Direct and indirect labour

—  Control over labour costs

—  Attendance and payroll system

—  Treatment of holiday pay, idle time, overtime etc.

—  Labour turnover

—  Methods of wage payment

Incentive system

—  Accounting for labours

—  Job evaluation and merit rating

—  Efficiency rating procedures


Overhead Control

—  Classification of overheads

—  Manufacturing overheads

—  Office and administrative overheads

—  Selling and distribution overheads

—  Distribution of overheads

—  Absorption of overheads

—  Treatment of under-absorbed and over-absorbed overheads

—  Treatment of certain items in costing

—  Actual overhead rate vs. predetermined overhead rate

—  Blanket overhead rate vs. departmental overhead rate

—  Supplementary overhead rate

—  Concept related to capacity

—  Comprehensive machine hour rate


Unit costing

—  Meaning

—  Cost sheet

—  Production statement

—  Production account


Cost Accounts System, Cost Control (Integrated & Non-integrated Accounting System)

—  Non-integrated accounting system

—  Integrated accounting system

—  Reconciliation of cost and financial accounts


Methods of Costing

  • Job Costing System

—  Meaning, procedures of job cost accounting,

—  Advantages of job costing, job ticket

  • Batch Costing System

  • Contract Costing System

—  Meaning

—  Recording of contract cost

—  Specific aspects of contract costing

—  Profit on incomplete contracts

—  Distinction between job costing system and contract costing system

—  Progress payments, retention money, escalation and de-escalation clause, balance sheet entries

  • Process Costing System

—  General principles

—  Treatment of process loss and gains

—  Working progress

—  By-products and joint product

— Inter-process profits

—  Distinction between job costing system and process costing system

—  Equivalent production unit

—  Apportionment of joint costs

  • Operating Costing System

—  Introduction, scope

—  Collection, classification and ascertainment of cost

—  Cost unit


Cost concepts for Decision Making

  • Cost behavior

  • Methods of separating fixed and variable costs

  • Cost Volume Profit Analysis

—  Profit volume ratio

—  Break-even point

—  Margin of safety

—  Target profit

  • Limiting factor

  • Marginal costing and differential costing

  • Marginal costing and absorption costing

—  Marginal cost equation

—  Break even chart and angle of incidence

—  Sales mix

—  Advantages of marginal costing

—  Limitations of marginal costing Costing for planning and Control – Budgets

  • Budgets and budgetary control system

—  Steps in budgetary control

—  Types of budgets

—  Fixed and flexible budgeting

—  Implementation of budgets

—  Control ratios

—  Advantages of budgetary control system

—  Limitations of budgetary control system

—  Zero based budgeting

  • Standard costing

—  Meaning and Objectives

—  Advantages and limitations

—  Distinction between budgetary control and standard costing

—  Types of standards

—  Setting standards

—  Material cost variance analysis

—  Labor cost variance analysis Uniform

  • Costing and Inter firm comparison

—  Meaning

—  Application of uniform costing

—  Objectives of uniform costing

—  Advantages of uniform costing

—  Limitations of uniform costing

—  Inter-firm comparison Cost

  • Control And Cost Reduction

—  Introduction

—  Distinction between cost control and cost reduction

—  Advantages of cost reduction

—  Cost reduction plan & program

—  Scope of cost reduction


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