Cost accounting systems
| by Roger Gibbins 27 Jul 2001 |
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Paper B2, Cost Accounting Systems is available in two formats:
The purpose of this article is not to discuss differing techniques required for the alternative examinations. Candidates are, in this respect, advised to consult with their tuition provider concerning the appropriate techniques to adopt dependent upon the type of examination they choose. What can be said here is that both types of examinations will be ‘just as testing’ and that in general the knowledge and ability required will be comparable. This article therefore seeks to advise candidates of what the examiner would expect from them to demonstrate competence with the subject area. Costing encompasses many things, such as relatively simple matters such as stock valuation methods used when issuing stock to production to more difficult areas such as the use of standard costing to establish overhead variances. The examination is designed to test candidates ability to apply a range of methods to given scenarios and thus provide evidence that they could operate such methods in the working environment. Past examinations have frequently shown that candidates clearly have numerical ability, but all too often they demonstrate weakness in the theory underlying the application of costing principle. Classic examples are situations in which candidates express material usage variances in weight or labour efficiency variances in hours, when both should be expressed in value. Further, there are cases in which candidates express variances that are greater than the elements used to calculate the variance. Previous Examiners Reports have often stated that if candidates spent more study time on the principles they would more easily understand the ‘reasonableness’ of their computed answers – that is, do the answers derived make sense. No questions will be set on areas or topics that are not covered in the recommended
text books. However it is not possible in any one text book to include every
situation in which costing needs to be applied. Candidates should therefore
seek out copies of past examinations and suggested answers. They should attempt
the questions under examination conditions (including time limits) and thoroughly
review their answers – if the answers are incorrect then candidates must
identify why errors have been made. It may well be the case that insufficient
study has been undertaken. If candidates are still struggling then they would
be well advised to seek further help, perhaps from more senior workplace colleagues
or their tuition provider. Articles concerning costing also often appear in Student Accountant and other accountancy journals. These articles whilst discussing a topic generally will usually include a ‘typical’ or ‘past’ examination question – these should be referred to in order to enhance knowledge and become familiar with an organised approach to solving problems. Again such publications should be available from libraries or colleges. Candidates should not ignore the fact that this paper also includes areas concerning data collection and presentation – for example graphs and charts. These questions in many cases are not always answered well because candidates are unfamiliar with the different types of charts. Costing is in principle about the provision of information – charts and graphs can do the same. A competent cost accountant should therefore be able to provide information in these formats. As stated earlier the purpose of the examination is an attempt to replicate typical accounting situations in typical organisations. A candidate who can successfully undertake the examination will in principle demonstrate their ability and flexibility to apply cost accounting in the workplace. Roger Gibbins is the Examiner for Paper B2 Cost Accounting Systems |
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