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CMA Intermediate Cost Accounting Syllabus
The Cost Accounting syllabus for CMA Intermediate in full: 3 chapters and 8 topics, every one listed below, plus 50 Cost Accounting flashcards with answers.
Cost Accounting syllabus: all 3 chapters
Expand any chapter to see its topics and sub-topics.
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Introduction to Cost Accounting
2 topics- Objectives and Scope of Cost Accounting
- Cost Concepts and Classifications
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Costing Methods
3 topics- Job Costing
- Contract Costing
- Process Costing
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Cost Control and Analysis
3 topics- Budgetary Control
- Standard Costing
- Variance Analysis
CMA Intermediate Cost Accounting flashcards — 50 questions with answers
What is Cost Accounting?
The process of recording, classifying, allocating, and reporting costs of products, services, or activities to determine cost and aid managerial decision-making and control.
State the three primary objectives of Cost Accounting.
1) Ascertainment of cost, 2) Cost control and cost reduction, 3) Providing information for managerial decision-making and planning.
How does Cost Accounting differ from Financial Accounting?
Cost Accounting is for internal management, focuses on per-unit/product cost, is not legally mandatory (except in some cases), and reports frequently; Financial Accounting is for external parties, statutory, and prepares overall P&L and Balance Sheet periodically.
Define 'Cost'.
The amount of expenditure (actual or notional) incurred on, or attributable to, a specified thing or activity.
Define 'Cost Centre'.
A location, person, or item of equipment (or group thereof) for which costs are ascertained and used for cost control.
Define 'Cost Unit'.
A unit of product, service, or time (or combination) in relation to which costs are ascertained or expressed, e.g., per tonne, per km, per litre.
Distinguish between Cost Control and Cost Reduction.
Cost Control aims to keep costs within set standards/budgets (maintaining existing standards); Cost Reduction is a permanent, real reduction in unit cost without impairing quality or suitability.
What is the difference between Direct Cost and Indirect Cost?
Direct costs can be conveniently traced to a specific cost object (e.g., direct materials, direct wages); indirect costs cannot be directly traced and are apportioned (overheads).
What are the three elements of cost?
Materials, Labour, and Expenses — each further divided into direct and indirect.
What is Prime Cost?
Prime Cost = Direct Materials + Direct Labour + Direct Expenses.
What is Works (Factory) Cost?
Works Cost = Prime Cost + Factory/Works Overheads.
What is Cost of Production?
Cost of Production = Works Cost + Administration Overheads.
What is Cost of Sales (Total Cost)?
Cost of Sales = Cost of Production + Selling and Distribution Overheads.
Classify costs by behaviour (variability).
Fixed costs (constant in total irrespective of output), Variable costs (vary directly with output), and Semi-variable/Semi-fixed costs (partly fixed, partly variable).
What is a Sunk Cost?
A historical cost already incurred that cannot be recovered and is irrelevant to future decision-making.
What is an Opportunity Cost?
The value of the next-best alternative foregone when one course of action is chosen over another.
Differentiate Product Cost and Period Cost.
Product costs are inventoriable costs attached to units produced (DM, DL, factory overhead); period costs are charged against revenue in the period incurred (e.g., admin, selling expenses).
What is a Conversion Cost?
Conversion Cost = Direct Labour + Factory (Manufacturing) Overheads — the cost of converting raw materials into finished goods.
What is Job Costing?
A costing method where costs are collected and accumulated for each separate job, order, or batch, used where production is to specific customer orders.
Give two industries suited to Job Costing.
Printing presses, repair workshops, construction of special equipment, furniture made to order, foundries (any made-to-order/customized production).
Show the other 30 Cost Accounting flashcards
What is a Job Cost Sheet (Job Card)?
A document that records all costs — materials, labour, and overheads — charged to a particular job to ascertain its total and unit cost.
What is Batch Costing?
A modification of job costing where a group of identical units (a batch) is treated as one job; cost per unit = total batch cost / number of units in the batch.
What is the Economic Batch Quantity (EBQ) formula?
EBQ = sqrt( (2 x D x S) / C ), where D = annual demand, S = set-up cost per batch, C = carrying cost per unit per annum.
What is Contract Costing?
A method where costs are accumulated for each large, long-duration contract (treated as a separate cost unit), typically used in construction, civil engineering, and shipbuilding.
How does Contract Costing differ from Job Costing?
Contracts are large, of long duration, usually site-based and extend over accounting periods (requiring profit on incomplete contracts); jobs are smaller, shorter, and factory-based.
What is 'Work Certified' in Contract Costing?
The value of contract work completed and approved by the architect/surveyor up to a given date, on which the contractee makes payment.
What is 'Retention Money' in Contract Costing?
The portion of work-certified value withheld by the contractee (not yet paid) as security until satisfactory completion; Retention Money = Work Certified - Cash Received.
What is 'Notional Profit' on a contract?
Notional Profit = Value of Work Certified - (Cost of work to date - Cost of work uncertified). It is the apparent profit on the certified portion.
What proportion of profit is taken to P&L when a contract is between 25% and 50% complete?
Profit to P&L = (1/3) x Notional Profit x (Cash Received / Work Certified).
What proportion of profit is taken to P&L when a contract is 50% or more complete (but not near completion)?
Profit to P&L = (2/3) x Notional Profit x (Cash Received / Work Certified).
How is profit treated when a contract is less than 25% complete?
No profit is transferred to P&L; the entire notional profit is kept as a reserve (treated as prudence).
What is an Escalation Clause in a contract?
A clause allowing the contractor to recover increased costs (of material, labour, etc.) above an agreed level from the contractee, protecting against price rises.
What is Process Costing?
A costing method used where production is continuous and output passes through a series of processes; cost is accumulated per process and averaged over units produced.
Give two industries suited to Process Costing.
Chemicals, textiles, oil refining, sugar, paper, paint, cement, food processing (continuous mass production).
What is Normal Loss in Process Costing and how is it treated?
Normal Loss is the unavoidable, expected loss inherent in the process; its cost is absorbed by good units, and any scrap value reduces the process cost.
What is Abnormal Loss and how is it valued?
Loss exceeding the normal loss; valued at the cost per good unit = (Total process cost - scrap value of normal loss) / (Total input units - normal loss units), and charged to Costing P&L.
What is Abnormal Gain?
When actual loss is less than normal loss; the extra good output is valued at the normal cost per good unit and credited to Costing P&L.
What are Equivalent Units (Equivalent Production)?
Incomplete (WIP) units expressed as a number of fully complete units based on degree of completion, e.g., 400 units 50% complete = 200 equivalent units.
What is a Joint Product vs a By-product?
Joint products are two or more main products of significant value produced simultaneously from the same process; a by-product is a secondary product of relatively minor value arising incidentally.
What is a Budget?
A quantitative and/or financial statement of the plan and policy to be pursued during a defined future period, prepared and approved prior to that period.
What is Budgetary Control?
The system of using budgets to plan and control operations by comparing actual results with budgeted figures, analysing variances, and taking corrective action.
What is a Flexible Budget?
A budget designed to change (flex) with the level of activity attained, recognising the distinction between fixed and variable costs — unlike a fixed budget.
What is a Master Budget?
The summary budget consolidating all functional/subsidiary budgets, culminating in a budgeted P&L and Balance Sheet for the organisation.
What is Zero-Based Budgeting (ZBB)?
A budgeting technique where every activity must be justified from a 'zero base' each period rather than basing it on previous budgets/actuals.
What is the Principal (Key) Budget Factor?
The factor that limits the activities of an organisation (e.g., sales demand, raw material, capacity); it must be identified first as all other budgets are prepared around it.
What is Standard Costing?
A technique of setting predetermined (standard) costs, comparing them with actual costs, and analysing variances to control costs and measure performance.
What is a Standard Cost?
A predetermined cost computed in advance of production, based on expected efficient conditions, used as a benchmark against actual cost.
What is the Material Cost Variance and its formula?
The difference between standard cost of materials for actual output and actual cost. MCV = (Std Qty x Std Price) - (Actual Qty x Actual Price).
State the formulas for Material Price Variance and Material Usage Variance.
MPV = Actual Qty x (Std Price - Actual Price); MUV = Std Price x (Std Qty for actual output - Actual Qty). MCV = MPV + MUV.
State the formulas for Labour Rate Variance and Labour Efficiency Variance.
LRV = Actual Hours x (Std Rate - Actual Rate); LEV = Std Rate x (Std Hours for actual output - Actual Hours). Labour Cost Variance = LRV + LEV.
CMA Intermediate Cost Accounting FAQ
What is in the CMA Intermediate Cost Accounting syllabus?
CMA Intermediate Cost Accounting is split into 3 chapters: Introduction to Cost Accounting, Costing Methods and Cost Control and Analysis. Together they contain 8 topics.
How many chapters are in CMA Intermediate Cost Accounting?
3 chapters, containing 8 topics. The largest chapter is Costing Methods, with 3 topics.
Are there flashcards for CMA Intermediate Cost Accounting?
Yes — a 50-card Cost Accounting deck, printed in full in the flashcards section of this page and available in the Examius app with spaced repetition. The free plan covers one exam of your choice, including its flashcards; Examius Pro, a one-time purchase, unlocks every other exam and deck.