University of San Carlos School of Business and Economics Business Administration Department SYLLABUS Course No.

Course Title Credit Prerequisite Courses Revised : : : : : AC 512 Cost Accounting Part I 3 units (lecture) Third Year Level by Rey D. Amaya Revised 2nd semester, AY: 2011 2012

Overview of the Course AC 512 will give you an insight on the different aspects of cost accounting system that a cost accountant must know. This course will let you view the multifaceted roles cost accountant play particularly in the costing of products and services as well as the appropriate costing method applicable to the operation of the business. AC 512 makes cost information relevant for students. It helps them understand the critical role that cost management information plays in the overall success of an organization and teaches them the strategic and decision-making skills necessary to become tomorrows cost accountant. Course Description This course is a continuation of the study of cost accounting. It includes the basic concepts and underlying procedures for process costing, hybrid costing, joint product and byproducts as well as standard costing. It also includes other cost accounting topics like JIT System/ Backflush accounting, Product life cycle, target costing, kaizen costing and theory of constraints

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General Objectives During the semester, the students are expected to: 1. develop a deep concern and understanding of a good cost accounting system 2. realize that this enhances not only the reliability of the accounts financial report but also the development of an honest and responsive management; and 3. acquire the value of diligence and fairness as they prepare reliable reports that users of information need as basis for their decision. Classroom Management 1. Attendance is a MUST. Attendance in all classes is required. Being present in class means that you attend each class, and come prepared having read the chapters and the exercises or cases that are assigned for that class. There are 54 sessions/hours in this course and you may incur only ten (10) absences for MWF schedules or seven (7) absences for TTH schedules. Otherwise, you will automatically be dropped from class and receive a grade of either NC (No Credit) or a failing grade of 5.0 whichever is applicable. 2. Readmission. Students who incur three consecutive (3) absences will be asked by the instructor to see the Department Chair to secure permission to be re-admitted to class. A re-admission slip should be properly accomplished for this purpose. 3. Tardiness is discouraged. Make sure that you come on time, as it becomes a source of irritation for the members of the class and the professor when students come late. As a policy for this class, you will be considered late if you come to class after 15 minutes of the time, three instances of tardiness whether incurred consecutive or not is considered one absence. Learn to be professionals; respect for other peoples time is a principle that should be valued.

4. Seat Plan. A permanent seat plan will be made at the start of the semester. You are advised to keep to your assigned seating arrangement; otherwise, you will be marked absent for that day. 5. Prayer. Classes should always start and end with a short prayer. The instructor can opt to lead the prayer or assign students to do this alternatively. 6. Classroom Management. Students should assist in maintaining the orderliness and cleanliness of the classrooms. Graffiti writing is strictly prohibited. Any student found violating this rule will be punished with the appropriate sanction. Before leaving the classroom, the instructor with the help of the students, should ensure that no litter/garbage is left behind and that chairs are in their proper order. Should the class be the last schedule for the day, the instructor should arrange that the lights and air conditioning units are switched off.

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7. Mobile Phones. Use of mobile phones inside the classroom is strictly prohibited. Switch them off or place them under silent mode before entering your classes. The instructor has the right to confiscate mobile phones that rings and/or is used during class hours. The confiscated unit can only be claimed in the Deans office at the end of the semester. 8. Eating and Drinking. Food and drinks are not allowed inside the classroom and in the corridors. It is your responsibility to properly schedule your classes so that meals and snacks can be taken at its proper time. Consultation Hours. Students are encouraged to see the instructor during consultation hours for any concerns, questions and assistance with regards to the course. Instructors should ensure that they are available on these hours and at the agreed location.

9.

10. Submissions. Timely submission of written requirements will be strictly followed. Just like when you submit a report to the Bureau of Internal Revenue (BIR), BIR would charge you penalty. The penalty is collected not for the purpose of making money; it is meant to discourage late submission of reports. It is also the same in this class. The penalty for late submission of reports is non-acceptance 11. Class Participation. Everyone is expected to offer his or her opinions in class discussion, to ask questions relevant to the discussion and to share information of relevance to the course. However, please do not dominate class discussions. Be conscious enough to realize when you are already spending more time talking than your classmates would appreciate. 12. Current Market Discussions. You are urged to conduct daily reading as they relate to actual international finance news and topics. Try to spend 10-15 minutes of your time every day reading any of the optional periodicals available in the library such as The Asian Wall Street Journal, Business World, Harvard Business Review, Fortune, Forbes, Business Week, The Far Eastern Economic Review, The Economist, and surf the relevant international finance websites suggested in this course syllabus. 13. Computer Applications. Students are expected to be proficient in using common applications software such as Microsoft Word, Excel and PowerPoint. This is essential as you will be making class presentations and submitting computerized assignments, researches, reports and case analyses. 14. Library Hours. Maximize the use of the library resources. The library hours are: Monday to Saturday 7:30 a.m. to 8:00 p.m. 15. Enjoy every moment of the class. Lastly, learning should be fun and exciting. Enjoy your classes! It will be such a tragedy if you will be miserable in the class. Participate so you get the most of this course.

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Suggested Learning Experiences 1. Lecture-Discussion 2. Group Dynamics / Games 3. Mini Case Analysis 4. Internet Research 5. Individual / Group Presentations 6. Debate 7. Class Interaction 8. Seatwork 9. Boardwork 10. Video Watching and Analysis

Course Requirements 1. Regular Attendance 2. Active Class Participation 3. Passing Grades 4. Completion & Submission of case analyses, assignments 5. Right attitude toward course

Grading System Midterm Grade: Test/ Quizzes 33% Other Requirements 33% Midterm Exam 33% Final Grade: Midterm Grade Class standing Final Exam

33% 33% 33%

For purposes of transmutation, the course will use the following grade equivalent (at 50% passing): Grade Equivalent 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 2.0 Grade Raw Score Equivalent 73 74 2.1 71 72 2.2 69 70 2.3 67 68 2.4 65 66 2.5 62 64 2.6 59 61 2.7 56 58 2.8 53 55 2.9 50 52 3.0 Below 3.0 is equivalent to a 5.0

Raw Score 95 100 93 94 91 92 89 90 87 88 85 86 83 84 81 82 79 80 77 78 75 76

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Specific Objectives Week 1: 3 hours

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

Orientation 1. Introduction of the members of the class 2. Setting of expectations 3. Discussion of classroom rules and policies 4. Revisit Vision and Mission Statements of the University of San Carlos 5. Checking of admission slips 6. Setting of seat plan 7. Grouping of students 8. Course Overview: Distribution and presentation of the course syllabus. Discussion of the content of the syllabus for the purpose of clarification. Explore course structure, sequencing of subject matter. Discussion on the course requirements and grading. Introduction to Process Costing At the end of the session, students should be able to: 1. Define process costing and describe its characteristics. 2. know the similarities and distinctions between job order costing and process costing. 3. identify the types of firms or operations for which process costing is used or most suitable 4. compare the advantages and disadvantages of using process costing

I. Course Orientation A. Introduction B. USC Vision-Mission C. Course Description D. Course Objectives E. Course Requirements F. Alternative Activities G. Grading System H. House Rules

group dynamics interaction leveling expectations hand-outs, notes

participation written summary question & answer learning statements recitation

A. Define process costing, B. Characteristics, advantages and disadvantages of process costing C. Similarities and distinction of Job order Costing and Process Costing D. Types of firms or operations for which process costing is used or most suitable to apply. E. Examples of companies that are using process costing

Lecture-discussion Interaction PowerPoint presentation

question & answer learning statements recitation

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Specific Objectives

Contents

Mode of Delivery / Learning Activities and Resources Lecture-discussion Interaction PowerPoint Presentation

Assessment Scheme

Flow of Cost in Process Costing At the end of the session, students should be able to: 1. describe a processing department 2. trace the flow of manufacturing costs in process costing 3. explain the three (3) product flow formats associated with process costing. 4. understand the role of the cost accountant. 5. know the significance of the monthly cost of production report.

A. Review the flow of costs including journal entries in a manufacturing firm. B. Diagram of the flow of costs in process costing. C. Processing department D. Explain the 3 product flow formats associated with process costing (sequential, parallel and selective product flow). E. Role of the companys cost accountant in preparing the monthly cost of production report and its significance

question & answer recitation assignment and seatwork boardwork

WEEK 2 = 3 hours Quantity Schedule 1. enumerate the steps involve in process costing 2. explain step #1 in process costing. 3. prepare the quantity schedule. 4. define equivalent production. 5. compare the 2 alternative methods of costing inventories in process costing. 6. compute the equivalent production without lost units using either: a) Weighted Average Method b) FIFO method A. Steps of Process Costing B. Preparation of Quantity Schedule C. Equivalent Unit of Production With or without beginning inventory First and Subsequent department Using Weighted Average and FIFO Lecture-discussion Interaction question & answer practice computations recitation BoardWork Assignment and seatwork

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Specific Objectives

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

WEEK 3 = 3 hours Preparation of Cost of Production Report At the end of the session, students should be able to: 1. Compute the unit cost of materials, labor or overhead in a production department/process. 2. Prepare a cost of production report not involving production losses/spoilage using weighted average method. 3. Prepare a cost of production report not involving production losses/spoilage using FIFO method. 4. Record the transactions occurring in a production department/process using process costing A. Computation of Unit Production Cost under Weighted Average and FIFO method. B. Preparation of Cost of Production Report without production losses C. Preparation of Journal Entries under different inventory costing method Lecture-discussion Problem Solving question & answer practice computations recitation BoardWork Assignments and seatworks

Week 4 = 3 hours Accretion At the end of the session, students should be able to: 1. prepare a Cost of Production Department involving accretion using: a) weighted average method b) FIFO method 2. compute the unit cost transferred-in under each alternative costing method A. Describe accretion B. Preparation of CPR involving accretion under Weighted Average Method and FiFO method Lecture-discussion Problem Solving question & answer practice computations recitation BoardWork Assignments and seatworks

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Specific Objectives Accounting for Production Losses At the end of the session, students should be able to: 1. identify the different types of production losses in process costing and their causes. 2. determine the cost of normal and abnormal spoilage. 3. differentiate continuous losses or spoilage from discrete losses or spoilage. 4. prepare cost of production report under production losses 5. journal entries under production losses

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

A. Definition of terms: Accepted Quality Level (AQL) of production. Economically reworked Defective units Spoiled units Normal and abnormal loss Method of Neglect B. Types of Lost Units: Continuous vs. Discreet Normal vs. Abnormal C. EUP calculation with lost units or spoiled units D. Preparation of Cost of Production Report with production Losses E. Journal Entries to account for production losses. F. Accounting treatment of Defective units.

Lecture-discussion Problem Solving PowerPoint Presentation Supplementary Notes

question & answer practice computations recitation BoardWork Assignments and seatworks

Week 5

= 3 hours

Implementation and Enhancement of Process Costing At the end of the session, students should be able to: 1. use standard costs in process costing. 2. determine how to apply activity-based costing (ABC) in process costing. 3. apply the principles of Theory of Constraints (TOC) in process costing. A. Define standard costs and activity- based costing (ABC) system. B. Adopting ABC in Process Costing C. Use of TOC in Process costing Lecture-discussion Problem Solving question & answer practice computations recitation BoardWork

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Specific Objectives Week 6 = 3 hours Operation Costing System/ A. B. C. D.

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

Hybrid Costing/ Blended Costing

At the end of the session, students should be able to: 1. Describe the characteristics of a hybrid costing system. 2. Identify the companies that will apply hybrid or operation costing system. 3. Prepare the entries involved in hybrid costing. Week 7 and 8 = 6 hours Allocation of Joint Cost and Accounting for By Products At the end of the session, students should be able to: 1. differentiate joint products from by-products; 2. identify scrap materials and waste 3. describe a joint process. 4. discuss the various methods of allocating joint costs to joint products 5. determine total production costs in a joint process. 6. identify the reasons why JC should be allocated to individual product or service. 7. describe the nature of by-products. 8. discuss the different methods of costing the byproducts. 9. apply joint allocation method in service and not for the profit organization.

Definition of Hybrid Costing Application of Hybrid Costing Characteristic of Hybrid Costing Journal Entries in Hybrid Costing

Lecture-discussion Problem Solving

question & answer practice computations BoardWork

A. Categories of products: main products or joint products by-products scrap and waste. B. Allocating Joint costs to Joint Products Physical measure allocation vs. monetary measure allocation Sales value at split-off Net Realizable value at split off Approximated net realizable value at split-off C. Alternative methods of costing the by-products/scrap realized value approach vs.

Lecture-discussion Problem Solving Supplementary notes PowerPoint presentation

question & answer practice computations BoardWork Assignments and Seatwork

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Specific Objectives

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

Week 10

net realizable value approach replacement cost method vs. the reversal cost or market value method) D. Allocating joint cost in service and not for profit organization Week 9 MIDTERM DEPARTMENTAL EXAM ITEM ANALYSIS OF MIDTERM DEPARTMENTAL EXAMINATION RESULTS INTRODUCTION TO STANDARD COSTING Week 11 FOUNDATION WEEK ALTERNATIVE ACTIVITY question & answer practice computations BoardWork Assignments and Seatwork

Week 12 = 3 hours Introduction to Standard Costing System At the end of the session, students should be able to: 1. describe a standard cost system and its use. 2. compare actual cost system, normal cost system and standard cost system. 3. determine the standard cost of materials, labor and overhead. Standard Cost Variances (Material and Labor) At the end of the session, students should be able to: 1. define variance and use the formula to compute the material and labor cost variances 2. Identify the causes of favorable and unfavorable material and labor cost variances. 3. pinpoint the person or department responsible for the material and laborcost variances. 4. record the purchase and issuance of materials including material cost variances. A. Definition of Terms B. Application, rationale, users, benefits and limitation of Standard Cost C. Comparison of Standard and Actual cost system D. Classification of standards E. Reasons for unfavorable and favorable material and labor variances F. 2 Way Method Analysis for Material and labor variances G. Journal entries for purchase and issuance of material cost variances. H. Journal entries for payroll including the labor cost variances. Lecture-discussion Problem Solving Supplementary notes PowerPoint presentation

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Specific Objectives 5. record the payroll including the labor cost variances. Week 13= 3 hours Overhead Standards and Variances At the end of the session, students should be able to: 1. use the formula to compute the overall overhead variance and its breakdown. 2. identify the causes of favorable and unfavorable overhead cost variances pinpoint the person or department responsible for the various overhead cost variances 4. record the actual and applied overhead including the various overhead cost variances. 5. describe the application of management by exception principle and its significance 6. identify ways of controlling the cost variances. 7. identify the alternative ways of closing the standard cost variances. Responsibility and Control of Variances At the end of the session, students should be able to: 1. prepare a variance analysis report as a tool to measure performance. 2. identify the person or department who will prepare and who will receive the variance analysis report. 3. determine the frequency of preparing the variance analysis report

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

A. Causes of overhead variances B. Overhead Standards and Variances 2 Way Method 3 Way Method 4 Way Method C. Journal entries in a Standard Cost System D. Management by Exception E. Controlling Cost Variances F. Closing standard cost Variances G. Variance Analysis Report H. Identification of key personnel responsible for variances I. Operating Performance evaluation

Lecture-discussion Problem Solving Supplementary notes PowerPoint presentation

question & answer practice computations BoardWork Assignments and Seatwork

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Specific Objectives Week 14 3 hours Mixed and Yield Variances for Materials and Labor At the end of the session, students should be able to: 1. compute the material mix, material yield and material quantity variance. 2. determine the effect of substituting a nonstandard mix of material during the production process. 3. compute the labor mix, labor yield and labor efficiency variance. 4. justify the occurrence of labor mix, labor yield and labor efficiency variance. Week 15 = 3 hours Introduction to JIT System and Backflush Costing At the end of the session, students should be able to: 1. describe a Just-in-time (JIT) System and the Kanban system. 2. distinguish between traditional costing system and a JIT system. 3. discuss the Six-Sigma Method in a JIT environment and its significance 4. rationalize why JIT costing is called backflush costing. 5. identify the types of businesses that might use or apply backflush costing. 6. identify the advantages and disadvantages or difficulties of backflush costing 7. prepare the journal entries under backflush

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

A. Diagram format in calculating the mix and yield variances for Materials and Labor B. Effect of substituting a nonstandard mix of material

Lecture-discussion Problem Solving Supplementary notes PowerPoint presentation

question & answer practice computations BoardWork Assignments and Seatwork

A. Pull manufacturing vs. Push manufacturing concepts. B. JIT philosophy in traditional costing system C. Characteristics, advantages and key elements of JIT Sytem D. Backflush Costing E. Advantages and disadvantages of Backflush Costing F. Journal entries for Backflush costing G. Value and Nonvalue added activities H. Computation for MCE or Service cycle time, delivery cycle time, throughput time and velocity

PowerPoint Presentation

or

Video question & answer

research output Group and Class Interactive discussion peer evaluation Supplementary notes

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Specific Objectives costing. 8. differentiate between value-added and non-value added activities 9. measure the performance in a JIT system using the following and determine its use: a. manufacturing cycle efficiency (MCE) or service cycle time b. delivery cycle time c. throughput time velocity Week 16 3 hours Other Cost Accounting Topics: TQM and Benchmarking At the end of the session, students should be able to: 1. identify the attributes of TQM and the eight dimensions of quality. 2. determine the benefits of TQM. 3. define benchmarking, identify the various types of benchmarking and its rationalization. 4. enumerate the steps in benchmarking International Quality Standards At the end of the session, students should be able to: 1. differentiate ISO 9000 series from ISO 14000 series. 2. rationalize why companies seek for ISO certification. 3. determine the requirements for ISO registration/application. 4. identify locally based companies seeking ISO A. B. C. D. E. F. G. H.

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

Definition of TQM and Quality Two Perspectives of Quality Benefits and Tenets of TQM Benchmarking Types of Benchmarking Steps in Benchmarking ISO 9000 and 14000 series Reasons and requirements for ISO certification. I. Locally based companies already ISO certified J. Cost of Quality K. Identification and computation of conformance and nonconformance cost L. Preparation of Cost of Quality Report

PowerPoint Presentation

or

Video question & answer research output

Group and Class Interactive discussion peer evaluation Supplementary notes

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Specific Objectives 5. certification and/or those that are already ISO certified. Quality Costs At the end of the session, students should be able to: 1. define quality costs. 2. differentiate between: a) control activities vs. failure activities conformance or compliance costs vs. non-conformance or non-compliance costs 3. identify the various types of quality costs 4. compute the cost of quality formulas. 5. prepare a Quality Cost Report Week 17 = 3 hours Product Life Cycle At the end of the session, students should be able to: 1. describe life cycle costing including stages in the product/sales life cycle. 2. determine the effect of product life cycle on costs, sales and profits 3. differentiate between upstream and downstream activities Kaizen and Target Costing At the end of the session, students should be able to: 1. differentiate Kaizen Costing from Target Costing. 2. compare Kaizen Costing with

Contents

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

A. Product Life Cycle Definition and stages Effect on cost, sales and profit Upstream and Downstream activities B. Kaizen and Target Costing Definition, benefits, problems and application of target costing Computation of target costing Kaizen costing vs. Standard and Activity Based Costing

PowerPoint Presentation

or

Video question & answer

research output Group and Class Interactive discussion peer evaluation Supplementary notes

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Specific Objectives 2.1 Standard Costing 2.2 Activity-based costing (ABC) 3. identify the advantages/benefits and disadvantages or potential problems of target costing. 4. identify the various ways in which the company can reduce product costs substantially. 5. determine target cost of a product. Theory of Constraints and Business Process Reengineering At the end of the session, students should be able to: 1. describe theory of constraints and identify its usefulness. 2. identify the steps in the theory of constraints analysis. 3. determine the focus of Business Process Reengineering (BPR). 4. identify the steps in implementing business process reengineering

Contents C. Theory of Constraints Definition of terms Steps and example of TOC implementation D. Business process reengineering steps and application

Mode of Delivery / Learning Activities and Resources

Assessment Scheme

Week 18

FINAL DEPARTMENTAL EXAM REFERENCES

A. BOOKS Textbook: Amaya, Fornolles, Micabalo and Sevilla, Simplified Cost Accounting II, 1st ed., C2012 Horngren, Charles T. Cost Accounting 13th ed., C2009 Raiborn & Kinney. Cost Accounting _th ed., Thomson Learning Asia C2008

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Carter, William K., Cost Accounting 14th ed., C2007 References: Dayag, Antonio J., CPA Reviewer in Practical Accounting 2, 2010 edition Garrison, Ray H. Managerial Accounting 12th ed., McGraw-Hill, C2008 Hansen & Mowen, Cost Management: Accounting and Control, Thomson South-Western, C2006 Weygandt, Kieso, Kimmell. Managerial Accounting, 3rd ed., John Wiley & Sons, Inc., C2006 Blocher, Edward J., et.al. Cost Accounting, A Strategic Emphasis, McGraw-Hill, international edition 3rd ed., C2005 B. WEBSITES http://hansen.swlearning.com http://www.caelus.com http://www.wiley.com/college/wegandt http://corpscan.com/brp.htm

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RUBRIC CRITERIA Individual Performance Group Involvement Class Commitment Practical Implications KNOWLEDGE shares readings, explains, expounds contributes ideas, communicates, listens consults, discusses, decides, relates plans, implements, evaluates, improves SKILLS reasoning, justifying, demonstrating, responding relating, agreeing, sharing, deciding, collating listening, conferring, associating, synthesizing forecasting, articulating, applying, modifying ATTITUDES and VALUES diligence, patience, perseverance tolerance, consideration, kindness openness, dedication, objectivity persistence, determination, optimism

30 pts 20 pts 20 pts 30 pts

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Presentation Rubric Attributes Above Standard (5-4.5) Resource Utilization At Standard (4.5-3.5) Attribute Still a Goal (3.5-0) /5 Attribute Points Earned

Utilized all resources described on Information Utilized some resources described on Information Sheet to Utilized few or no resources described on Sheet to acquire info; incorporated info information acquire info; incorporated information into presentation Information Sheet to acquire information into presentation and Web page. and Web page. presentation and Web page. (10-9) (9-7) Informed when speaking about the material while referencing notes. (9-7) Oral report included computer-generated and/or hand made visuals (clip-art, graphs, tables, charts, and QuickTime movies) that enhanced presentation, but was not presented with multimedia software. (13.5-10.5) Created pages accurately reflect the groups data, results and rationale. It is organized in a way that allows the reader to understand the information, data and results. Total Presentation Points Earned http://ed.fnal.gov/help/97/sightsound/litscrub.html (7-0) Unable to accurately discuss information related to topic or simply read information from paper. (7-0) Oral report did not include visuals or supplementary materials or materials used did not enhance presentation. (10.5-0) Created pages are incomplete, missing or do not get across the group's information, data and results.

Topic Discussion

Informed when speaking (without reference to notes) about the material. (10-9)

/10

Visuals & Supplementary Materials

Oral report included computer-generated and/or hand made visuals (clip-art, graphs, tables, charts, and QuickTime movies), and was presented with multimedia software that enhanced presentation. (15-13.5) Created pages accurately reflect the groups data, results and rationale. It is organized in a way that enhances the reader's ability to understand the information, data and results.

/10

Hyper Studio or Web Page Utilization

/15

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