Cost Accounting Techniques
Materials, labour, overheads, absorption and marginal costing, job, batch, process and service costing, and alternative principles.
How to study ACCA Applied Knowledge
Learn each principle, practise its application in the computer-based exam format and keep the three independent 50% pass decisions visible.
Core concepts
Concept 1
Material, labour and overhead costs require accurate source records, valuation, allocation and treatment of losses or idle resources.
Exam cue: Define the cost object and production process before choosing a costing method.
Concept 2
Absorption costing assigns production overhead to units, while marginal costing focuses on variable cost and contribution.
Exam cue: Separate cost allocation, apportionment and absorption and reconcile overhead under- or over-absorption.
Concept 3
Job, batch, process and service costing methods reflect different production flows and cost objects.
Exam cue: Track units, equivalent units, losses and joint outputs visibly through process calculations.
Risk pitfalls and guardrails
Using purchase price without applying the required inventory valuation method.
Guardrail: Do not import a rule, formula or reporting format from memory without checking the period, units, signs, entity and current syllabus scope.
Treating contribution as profit before fixed costs are covered.
Guardrail: Do not import a rule, formula or reporting format from memory without checking the period, units, signs, entity and current syllabus scope.
Applying one overhead rate when cost drivers differ materially.
Guardrail: Do not import a rule, formula or reporting format from memory without checking the period, units, signs, entity and current syllabus scope.
Memory anchors
Prime Cost
Prime cost is direct material plus direct labour plus other direct expense.
Absorption Costing
Absorption costing includes variable and fixed production overhead in product cost.
Marginal Costing
Marginal costing charges variable production cost to units and treats fixed cost as a period cost.
Contribution
Contribution equals sales revenue less variable cost.
Process Costing
Process costing averages costs across continuous or repetitive units and accounts for losses.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
Opening inventory 100 units, purchases 500, closing 80. Units issued?
Material is $8 per kg and usage 3 kg per unit. Direct material per unit?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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