Costs and Management Accounting

Financial Accounting

An expository methodology of the main concepts and theoretical foundations will be used, accompanied by the resolution of practical cases, thus allowing students a better understanding of its application to cost management in organizations.

Learning Objectives:

Provide the student with the knowledge and understanding of the process of formation of costs and results in companies and other institutions and the accounting procedures for their determination, analysis and use in the valuation of inventories, in the provision of information for planning and control as well as in the decision-making. Thus, the objectives to be achieved during this semester, generally speaking, are the following:

• Place Cost Accounting within the broader discipline that is Management Accounting;
• To learn the basic concepts that support Management Accounting;
• To learn the various ways of classifying different types of costs;
• Provide a detailed knowledge of the components that make up the overall cost of products;
• Through concrete situations, identify the different manufacturing regimes and use the most appropriate cost accumulation systems, namely job costing system, process costing and mixed costing.
• Learn to share indirect costs using the Cost Center method, distinguishing, among others, production and service centers;
• Understand and use the Activity-Based Costing (ABC) system, as an alternative to traditional costing systems, from the point of view of sharing and imputing indirect costs;
• Provide detailed knowledge of the various inventory costing systems, in particular the absorption or full costing system, variable costing system and rational total costing system;
• Solving joint production valuation problems, that is, obtained through physical or technological interdependence;
• Recognize the existing relationships between Cost, Volume and Result (CVR);
• Introduce the concepts, terminology and ways of using standard costs;
• Develop knowledge and techniques related to the preparation of budgets by functions and their control, in conjunction with strategic and operational planning, with a view to using the budget as a forecast management tool.

Skills:

After completing the curricular unit, the student must obtain the following general skills:

• Capacity for analysis, synthesis and decision-making;
• Critical capacity and self-criticism;
• Ability to understand theory and apply it to practice;
• Skills to work in a group.

And the following technical skills:

• Understand and use costing accounting systems to value inventories, for planning and management control and for decision making;
• Transpose these technical skills to the design and construction of information systems.

I – MANAGEMENT ACCOUNTING
1.1. Scope and objectives of Management Accounting
1.2. Income Statement: by Nature and Functions
1.3. Articulation Systems between Financial Accounting and Management Accounting

II – FUNDAMENTAL CONCEPTS OF MANAGEMENT ACCOUNTING
2.1. Costs, expenses and payments versus revenues, income and receipts
2.2. Cost Objects, Production Cost, Complex Cost and Economic-Technical Cost
2.3. Product Costs and Expenses for Periods
2.4. Classification of costs/expenses and income/revenues: Control and Decision Making

III – PRODUCTION COST COMPONENTS
3.1. Materials
3.2. Labor
3.3. Overheads
3.4. Costs of finished goods and work in progress
3.5. Non-manufacturing costs

IV – INVENTORY COSTING SYSTEMS
4.1. Alternative Costing Systems
4.2. Complete or Full Total Costing
4.3. Rational Total Costing
4.4. Variable Costing
4.5. Costing alternatives and effects on income

V – COST CENTER-BASED COSTING
5.1. Functional division of costs
5.2. Cost centers. Production and Service Centers
5.3. First-stage and step allocation of costs by Centres. Reciprocal benefits.
5.4. Cost Calculation Maps

VI – ACTIVITY-BASED COSTING (ABC)
6.1. ABC and cost center-based costing
6.2. Activities and cost drivers
6.3. Cost Calculation Maps

VII – DETERMINATION OF THE COST OF PRODUCTION AND PRODUCTION REGIMES
7.1. Production regimes
7.2. Direct Method (job costing system)
7.3. Indirect Method (process costing system)
7.4. Mixed Method

VIII – JOINT PRODUCTION
8.1. Reasons for sharing joint costs
8.2. Types of joint products: co-products, by-products and waste
8.3. Criteria for sharing joint costs by co-products
8.4. Criteria for sharing joint costs between by-products and waste.

IX – COST-VOLUME-RESULT RELATIONS (CVR)
9.1. Relationships between costs and volume
9.2. Cost Behavior
9.3. The contribution model
9.4. CVR Analysis in Variable Costing
9.5. The sales mix concept
9.6. CVR Analysis Assumptions

X – STANDARD COSTS
10.1. Concept and use of Standard Costs
10.2. Standard Cost Determination

XI – PLANNING AND BUDGETS
11.1. Budget Management
11.2. Rigid budget and flexible budget
11.3. Operating budgets
11.4. Treasury budget
11.5. Financial budget

NAO

Main Bibliography:

Saraiva, A., Rodrigues, A., Coimbra, C., Fantasia, M. e Nunes, R., (2018), Contabilidade de Gestão – Métodos de Custeio e Valorização de Inventários, 1ª edição, Editora Almedina, Coimbra.

Saraiva, A., Rodrigues, A., Coimbra, C., Correia, E., Fantasia, M. e Nunes, R., (2022), Contabilidade de Gestão – Métodos de Custeio e Valorização de Inventários – Exercícios, 2ª edição, Editora Almedina, Coimbra.

Caiado, A. Pires. (2015), Contabilidade Analítica e de Gestão, Áreas Editora, edição 10-2015.

Ferreira, Domingos e outros (2019), Contabilidade de Gestão Estratégia de Custos e de Resultados – Cost and Management Accounting, 2ª Edição, Editora Rei dos Livros.

Ferreira, Domingos e outros (2019), Contabilidade de Gestão Estratégia de Custos e de Resultados – Advanced Management and Managerial Accounting, 2ª Edição, Editora Rei dos Livros.

Complementary Bibliography:

Drury, Colin, (2021), Management & Cost Accounting, 11th Edition, Cengage Learning EMEA, Londres, Reino Unido.

Franco, Victor et al., (2010), Temas de Contabilidade de Gestão – Os Custos, os Resultados e a Informação para a Gestão, 3ª edição, Editora Livros Horizonte, Lisboa.

Franco, Victor et al., (2012), Temas de Contabilidade de Gestão – Gestão OrçAPental e Medidas de Avaliação do Desempenho, 3ª edição, Editora Livros Horizonte, Lisboa.

Garrison R.H., Noreen E.W., Brewer P.C.: (2020); Managerial accounting McGraw-Hill Irwin, 13th edition, New York.

Garrison, Ray H. e Noreen, Eric W. (2013), Contabilidade Gerencial, 14ª Edição, LTC Editora, Rio de Janeiro.

Hansen & Mowen (2005), Management Accounting, 7th ed., South-Western College Publishing.

Horngren, Charles T. et al.(2018), : Cost accounting a managerial emphasis- Prenhall.