Manufacturing and service activities happen in business organizations. The amounts of resources employed in these events are normally substantial enough to justify the need for a separate and specialized accounting systems known as cost accounting. This system covers the functional areas of materials, payroll, and overhead in manufacturing processes. Each of these areas has unique characteristics necessitating the use of various models and techniques that require different sets of competence and skills.
The professional accountant having a competent understanding and skills in dealing with the complex operating activities of materials management is referred to as Registered Materials Accountant (RMA). This professional accountant has a know-how in materials warehousing, procurement, and asset management with specific competence in inventory records and controls. The professional accountant having competence in payroll accounting is referred to as Registered Payroll Accountant (RPA). This practice includes the areas of developing payroll systems and design, payroll recording, compliance to laws and regulations governing employee benefits, and payroll reporting activities. Another area of equal significance is the factory overhead management that is divided into fixed and variable overhead for profit planning and control. It deals with reasonable overhead allocation models as bases of providing a more relevant overhead accounting report. It focuses in understanding the details of the overhead account and applying thereon the control technique to contain its cost.
The sets of accounting skills related to the manufacturing processes is covered in the Certified Cost Accountant (CCA) title. This field of accountancy underlines accuracy in its recording and reporting processes. As such, its value to financial accounting and management accounting cannot be more emphasized.
Level 1
Level 2
Level 3
Course Outline
IAS 2 – Accounting for Inventories
Introduction to manufacturing accounting and its environment
Internal Controls for Materials
Materials Costing
- Accounting for materials purchases, discounts, and returns
- Accounting for freight-in
- Accounting for defective units and spoilage
- Accounting for lost units
Materials Records
- Periodic materials inventory system
- Perpetual materials inventory system
Materials Planning and Controls
- ABC system and other fundamental materials planning and control techniques
- Economic order quantity
- Reorder point
- Optimal safety stock
Materials Accounting using the Job Order Costing Systems
Basic Journal Entries in Materials Management
Labor Accounting Flowchart and Business Forms
Labor Laws Governing Labor Accounting
- Basic wage laws
- Mandated social welfare benefits
- Retirement benefits
- Specialized industries
Internal Controls for Direct and Indirect Labor
Labor Costing
- Accounting for payroll, discounts, and returns
- Accounting for social welfare benefits and other mandated benefits
- Accounting for other employee benefits
Labor Records
- Employment paper
- Labor time tickets
- Labor time distribution
- Overtime approval and slip
- Payroll register preparation
- Payroll distribution
- Compliance and reporting to social welfare benefits
Accounting for Lost Units
- Basic Journal Entries in Payroll Accounting using Job Order Costing
All topics covered in Level 1
All topics covered in Level 2
ADVANCED COST ACCOUNTING AND CONTROL
Factory Overhead Accounting
- Economic cost in relation to quantity
- Variable costs
- Fixed costs
- Variable factory overhead
- Internal controls for variable overhead
- Variable overhead accounting flowchart and business forms
- Activity based costing
- Normal costing: Predetermined variable overhead rate
- Variable overhead journal entries
- Fixed factory overhead
- Internal controls for fixed overhead
- Fixed overhead accounting flowchart and business forms
- Activity based costing
- Normal costing: Predetermined fixed overhead rate
- Fixed overhead journal entries
- Accounting for lost units
- Basic journal entries in accounting for factory overhead using the job order costing
Accounting for Joint and By-Products
Process Costing
- Cost of production report
- Equivalent production
- Cost analysis
- Accounting for lost units
- Normal lost units
- Abnormal lost units
- Journal entries in the process costing system
Standard Costing
- Types of standards
- Setting the standard production costs
- Computing the standard costs
- Costs variances and analysis
- Direct materials costs variances
- Direct labor costs variances
- Variable overhead costs variances
- Fixed overhead costs variances
- Combined factory overhead variances
- Mix and Yield costs variances
- Standard costing journal entries
- Journal entries using the standard costing system
Advanced Materials Costs Accounting and Control
- Value process reengineering
- Computer integrated manufacturing systems
- Just-in-time inventory systems
- Flexible manufacturing systems
- Materials requirements planning
- Materials requirements and planning 2
- Advanced digital applications in materials management
- Balanced scorecard applied to materials management
Advanced Labor Cost Accounting and Control
- Learning curve theory
- Cumulative learning curve analysis
- Incremental learning curve analysis
Other costing techniques
- Activity-based costing
- Backflush costing
- Throughput costing
- Target costing
- Target pricing
- Batch costing