Checklist for Cost Accounting Management accounting

 Checklist for all students,know yourself..your first step for preparedness for Exam.. ✍️ yes or no for each point.. please co-operate..so that I can help you...this efforts help you to grab success in Exam confidently..

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1️⃣ Cost Concepts & Cost Classification (VERY IMPORTANT)

Types of Costs

• Fixed, Variable, Mixed (Semi-variable)

• Step fixed cost

• Committed vs Discretionary fixed cost

• Relevant vs Irrelevant cost

• Sunk cost ❌ (never relevant)

• Opportunity cost ✔️ (always relevant)

• Differential / Incremental cost

• Avoidable vs Unavoidable cost

• Explicit vs Implicit cost

• Economic cost = Explicit + Implicit

🔑 Exam trap: Book value ≠ relevant cost

 

2️⃣ Cost Behavior & Cost Estimation

Methods

• High–Low method (most tested)

• Scatter graph

• Least squares regression (conceptual)

Key terms

• Contribution margin

• CM ratio

• Relevant range

• Margin of safety

 

3️⃣ Cost–Volume–Profit (CVP) Analysis ⭐⭐⭐

Core formulas

• BEP (units) = Fixed Cost ÷ CM per unit

• BEP (sales) = Fixed Cost ÷ CM ratio

• Target profit analysis

• Sales mix (weighted CM)

Concepts tested

• Impact of price change

• Impact of fixed cost increase

• Operating leverage

• Assumptions of CVP

🔑 CMA favorite: Multi-product BEP

 

4️⃣ Job Costing vs Process Costing

Job Order Costing

• Direct material

• Direct labor

• Manufacturing overhead (applied)

• Predetermined overhead rate

Process Costing

• Weighted Average vs FIFO

• Equivalent units (EUP)

• Normal vs abnormal loss

🔑 FIFO gives higher cost in inflation

 

5️⃣ Activity-Based Costing (ABC) ⭐⭐⭐

Key terms

• Activities

• Cost pools

• Cost drivers

• Unit-level, Batch-level, Product-level, Facility-level

Exam focus

• Overcosting vs Undercosting

• When ABC is preferred

• Difference between ABC vs Traditional costing

 

6️⃣ Absorption vs Variable Costing ⭐⭐⭐

Differences tested

Item Absorption Variable

Fixed MOH Product cost Period cost

Inventory Higher Lower

Income Depends on inventory change Sales driven

🔑 Inventory ↑ → Absorption profit ↑

 

7️⃣ Standard Costing & Variance Analysis ⭐⭐⭐⭐

Material Variances

• Price variance

• Quantity (efficiency) variance

• Mix & Yield variance

Labor Variances

• Rate variance

• Efficiency variance

Overhead Variances

• Variable OH: Spending & Efficiency

• Fixed OH: Spending & Volume

• Flexible budget variance

🔑 Who is responsible?

• Price → Purchasing

• Efficiency → Production

 

8️⃣ Responsibility Accounting & Performance Measurement

Responsibility centers

• Cost center

• Revenue center

• Profit center

• Investment center

Performance measures

• ROI

• Residual income

• ROA

• Balanced Scorecard (Financial & Non-financial)

🔑 Residual income avoids under-investment

 

9️⃣ Budgeting & Forecasting ⭐⭐⭐

Types of budgets

• Operating budget

• Capital budget

• Cash budget

• Flexible budget

• Zero-based budgeting

• Rolling (continuous) budget

Budgetary control

• Static vs Flexible budget variance

 

🔟 Decision-Making Techniques (Highly Tested)

Decisions

• Make or buy

• Special order

• Shutdown vs continue

• Sell or process further

• Product mix (limiting factor)

Key principle

➡️ Only relevant costs & revenues matter

 

1️⃣1️⃣ Transfer Pricing

Methods

• Market price

• Cost-based

• Negotiated price

🔑 Goal congruence is the key concept

 

1️⃣2️⃣ Capacity Management & Throughput

• Theoretical capacity

• Practical capacity (used for OH rate)

• Normal capacity

• Throughput contribution

• Bottleneck analysis

 

1️⃣3️⃣ Lean Accounting & Modern Concepts

• Just-in-Time (JIT)

• Kaizen costing

• Target costing

• Total Quality Management (TQM)

• Value chain analysis

 

🔑 FINAL EXAM STRATEGY (US CMA)

• CMA tests logic more than formulas

• Identify relevant cost

• Watch inventory movement

• Variances → cause & responsibility

• CVP → assumptions always tested

 

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