What is cost? Cost is the price allotted to something. So when I need to buy a pen I go and ask the shop keeper the cost for a ball pen, he shows me 3 varieties one is of Rs. 5/-, one is for Rs. 7/- and one is for Rs. 10/- now I have with me Rs. 10/- but will it be logical for me to spend the entire money on a single pen? No it won’t. At the same time the pen for Rs. 5/- of very poor quality and will ruin my handwriting so I will settle for the best option that is the pen that costs Rs. 7/-
Similarly for huge industries and manufacturing firms a lot of such alternatives need to be considered and evaluated for a variety of factors; the cost of raw materials, rent charges, machinery cost, labour cost, etc. to ensure that we fix the variety with of the quality, quantity and price that suits us best we must evaluate and compare the different costs. This process of analysing, comparing the alternatives and finalizing the cost of a product is termed as cost accountancy.
Accountancy that we have studied as of now has been financial accountancy where we made accounts for proprietors and firms, in a way that they could showcase to their stake holders and share holders. Cost accountancy is not to be shown to outsiders it is made in a way that we keep it to ourselves and utilize it for making a lot of decisions. The rules, regulations and standards to cost accountancy are completely different from those that are used for financial accountancy. The format and the layout of the sums, the principles attached to them all are very different as the function of cost accountancy itself is very different as compared to financial accountancy.
Why do I need to Study this subject?
We need to know all aspects of accountancy and finance as students of Business studies. With cost accountancy there are 5 major things that we learn:
It helps to Reduce Expenses Who wants to waste money or spend unnecessarily? we all want to save as much as we can and hence we study cost accounting. It helps us identify where we can save costs.
Helps us become rational in our purchases: Because of cost accounting we learn to spend our money wisely and not make any unnecessary expenses. We think rationally before we blow p money.
Determination of Prices: It helps us in determining the prices of our goods appropriately.
Is it Boring?
No, cost accountancy is not boring, because it is a practical subject and a very different one in comparison to financial accountancy that we had learnt in the past.
Is it Difficult?
Yes but only a little bit, for those who love practical subjects this subject is not at all difficult but if you confuse with the formats initially you might find it a bit hard.
Do I need to join a Coaching Class for the same?
Yes, yes, yes you need a coaching class because it helps in learning all those aspects of cost accountancy that are new to you.
What is the Syllabus for the subject?
Cost accountancy is divided into 4 units as follows:
Unit I : Introduction & Importance of Cost Accounting:
Unit II :
- Elements of Cost: material – labour – overhead
- Bases of Cost Classification:
- Determination of Total Cost
Unit IV : Elementary Principles and Techniques of Marginal Costing (Excluding Problems on Managerial Decisions)
- Elementary Principles of Marginal Costing:
- Techniques of Marginal Costing
You can find a detailed syllabus and list of reference books right Here!
How do I Study this subject?
3 super easy stages to make cost accountancy simpler from the very beginning can be as follows:
Before each lecture: Read the introduction to each chapter that is going to be taught in class, it really helps to know what is going to happen today in class.
During the lecture: Note down steps on how to solve a particular type of sum or any points of theory that are being explained in class.
After the lecture: Read through the notes and revise the steps written down and practice each of the sum covered in class on that particular day.These three steps will ensure that you will not have to waste any more time on this subject. An addition to this will be that you must attend your college/ coaching classes lectures regularly, you simply can’t skip on those as that happens to be the most important part of your study schedule.
While you study practical subjects try to make it into group study, it makes things more interesting and ensures that you practise sums which while alone you may tend to be lazy and skip out on.
Doing Group Studies the Right way:
Group studies! Who actually studies in group studies? It’s usually gossip session or gaming session or hang out with the girls of the group and have fun session or maybe a combination of the three, but if done appropriately then Group Studies can be very helpful and fun simultaneously. Avoid group studies for theory subjects because unless the group is extremely focussed or you have a lot of doubts and someone in the group can help you solve them, you are not going to be able to focus anyways.
For practical subjects, group studies can actually be helpful. Even if there is one focussed person in the entire group the entire group will start getting in the groove and study. Do not expect that out of the total time you devote 100% is going to be utilized for studies, nope that’s not going to happen! But if you have a good group of peers and if all of you are focussed on scoring well then group studies can help you battle out 80% of your problem areas in the subject.
Put up some music while solving sums or have a bowl of popcorn or hot magi ready for everyone taking up about 30 of your time collectively but the rest of the time will be utilized well. Concepts, doubts, silly mistakes and errors that you didn’t notice will all come out in the open while studying in a group; eliminating which becomes quite easy post the revelations. Also the competitive edge and the spirit of team work both come into play helping you work harder and smarter than you would have done while studying alone.
Group studies is not a bad thing, in fact if all you set up common goals instead of individual goals and focus on winning it, as a team chances are that you might actually out do the entire class!
Try group studies if you feel comfortable and if not then you can stick to the usual self study routine, but whatever you do make sure you work hard and give it your best shot!