About the Book
The book entitled
Management Accounting is a comprehensive textbook specially designed to meet the needs of management students. It explores core concepts of management accounting through managerial applications and supplements them through numerous solved problems and case studies. Beginning with an overview of management accounting, the book acquaints the readers with the various cost concepts. It explains elements of cost like material costing, labour costing, direct expenses and overheads. It discusses the determination of cost through unit costing, job and batch costing, operating costing, contract costing and process costing. The book discusses planning, control and decision making and management applications. The book also covers advanced issues like learning curve, target costing, capacity management, kaizen costing, quality costing, activity based costing, throughput back flush costing, etc.
Readers will find this book highly useful for its in-depth coverage of the key concepts of management accounting and also as a guide to make informed and systematic business decisions.
Contents
Preface (v)
Part—1: Fundamentals
1. Management Accounting: Nature and Scope 3
• Definition of Management Accounting • Function of Management Accounting • Scope of Management Accounting • Significance of Management Accounting • Controller or Comptroller • Treasurer • Management Accounting Principles • Management Accounting and Financial Accounting • Cost Accounting and Management Accounting • Utility of Management Accounting • Limitations of Management Accounting • Installation of Management Accounting System • Tools of Management Accounting
2. Basic Cost Concepts 21
• Meaning of Cost Accounting • Objectives of Cost Accounting • Concept of Cost • Evolution of Cost Accounting • Elements of Cost • Components of Total Cost • Cost Sheet • Classification of Cost • Cost Unit and Cost Centre • Cost Estimation and Cost Ascertainment • Cost Allocation and Cost Apportionment • Cost Reduction and Cost Control • Installation of Costing System • Method of Costing • Techniques of Costing • Systems of Costing • Specific Cost Systems
3. Cost Behaviours and Estimation 47
• Cost Driver • Cost Behaviour Patterns • Variable Costs • Step-Variable Costs • Fixed Costs • Step-Fixed Costs • Semivariable Cost • Curvilinear Cost • Use of Cost Behaviour Patterns to Predict Costs • Engineered, Committed, and Discretionary Costs • Shifting Cost Structure in the New Manufacturing Environment • Cost Estimation • Accounting-Classification Method • Scatter Diagram • Visual-Fit Method • High-Low Method • Least-Squares Regression Method • Multiple Regression • Data Collection Problems • Engineering Method of Cost Estimation • Effect of Learning on Cost Behaviour • Application of the Learning Curve • Costs and Benefits of Information • Work Measurement • Summary • Review Problems on Cost Behaviour and Estimation Problem
Part—2: Financial Analysis
4. Ratio Analysis 85
• Meaning of Ratios • Classification of Ratio • Profitability Ratios • Coverageratios • Turnover Ratios • Financial Ratios • Categories of Ratios • Advantages of Ratio Analysis • Limitations of Accounting Ratios • Du Pont Control Chart • SWOT Analysis • Inter-firm and Intra-firm Comparison
5. Funds Flow Analysis 140
• Meaning of Fund Flow • Meaning of Funds Flow Statement • Uses of Funds Flow Statement
• Funds Flow Statement and Income Statement • Parties Interested in Funds Flow Statement
• Limitations of Funds Flow Statements • Preparation of Funds Flow Statement • Funds Flow Statement • Treatment of Provision for Taxation and Proposed Dividends • Depreciation as Source of Funds • Statement of Changes in Financial Position
6. Cash Flow Analysis 169
• Meaning of Cash Flow Statement • Preparation of Cash Flow Statement • Difference between Cash Flow Analysis and Funds Flow Analysis • Utility of Cash Flow Analysis • Limitations of Cash Flow Analysis • Accounting Standards 3 (Revised): Cash Flow Statements
Part—3: Planning and Control
7. Budgetary Control 197
• Meaning of Budget • Meaning of Control • Meaning of Budgetary Control • Budgetary Control as a Management Tool • Limitations of Budgetary Control • Forecasts and Budgets • Installation of Budgetary Control System • Classification of Budgets • Fixed and Flexible Budgeting
• Performance Budgeting • Control Ratios • Responsibility Accounting • Zero-base Budgeting
8. Standard Costing 261
• Meaning of Standard Costing • Budgetary Control and Standard Costing • Historical Costing, Estimated Costing and Standard Costing • Suitability of Standard Costing • Standard Costing as a Management Tool • Limitations of Standard Costing • Meaning of Standard Costs • Standard Costs and Budgeted Costs • Determination of Standard Costs • Revision of Standards
9. Variance Analysis 288
• Cost Variances • Direct Labour Variances • Overhead Variances • Sales Variances • Variance’ with Reference to Profit • Control of Variances • Accounting Procedure
10. Marginal Costing and Profit Planning 332
• Absorption Costing • Marginal Costing • Difference Between Absorption Costing and Marginal Costing • Marginal Costing and Direct Costing • Marginal Costing and Differential Costing
• Marginal Cost • Segregation of Semi-Variable Costs • Profit Planning • Cost Volume Profit Analysis • Break-even Analysis • Key Factor • Break-even Chart • Angle of Incidence • Assumptions Underlying CVP Analysis/Break-even Charts • Utility of CVP Analysis
11. Decisions Involving Alternative Choices 410
• Concept of Decision-making • Concept of Relevant Costs • Concept of Differential Costs • Steps in Decision-Making • Determination of Sales Mix • Exploring New Markets • Discontinuance of a Product Line • Make or Buy Decisions • Equipment Replacement Decision • Change Versus Status Quo • Expand or Contract • Shut Down or Continue
12. Analysis of Corporate Performance 439
• Modern Corporations • Performance Appraisal • Enterprise Performance Management (EPM)
• Balanced Scorecard • Benchmarking • Economic Value Added (EVA) • Measuring Coach’s Effectiveness • Measuring Cleaner Production • Summary Points
13. Human Resource Accounting 464
• Overview • Training and Selection Cost Analysis • Exit Cost Analysis • Conclusions
Bibliography 488
Index 492
About the Authors
Dr. P.V. Khatri is a Senior Faculty Member in the Department of Commerce, Swami Shradhanand College, University of Delhi. He has done his M.Com and Ph.D. from the Faculty of Commerce and Business, Delhi School of Economics, University of Delhi. He has also done his LL.B. from the Faculty of Law, University of Delhi. He also has to his credit MBA with specialisation in Marketing and Law. He has been associated with teaching and research on consumer affairs, consumer protection laws, social responsibility of business, corporate laws and governance in various institutions of higher learning including Indira Gandhi National Open University (IGNOU), Indian Law Institute (Deemed University) and Indian Institute of Public Administration (IIPA). He has also served as Professor and Director of a Business School under Guru Govind Singh Indraprastha University, Delhi
Dr. Sudhanshu Verma is a Assistant Professor of Banking and Finance with the Faculty of Management, Gurukul Kangri Vishwavidyalaya where he teaches and conducts research in the field of Banking, Finance and Operation research. He has authored two books and published five research papers in the journals of national repute. Dr. Sudhanshu has done his MBA from MJP Rohilkhand University Bareilly UP and his Ph. D. from Gurukul Kangri Vishwavidyalaya under the able guidance of Dr. Bindu Arora, Professor FMS. KGM Dehradun.
