At last a cost accounting book with all the right terminology in place hits my bookshelf. Cost Accounting: an essential guide was published in 2002 although I have just come across and read it for the first time.

Anyone who has been working with cost and management accounting for more than five or ten years is well aware that its terminology has been mangled by people who dip in and dip out of it. As these people try to make the subject either more interesting and/or more understandable they have played with the terminology and confused the life out of everything.

I don't want to over egg the pudding of course but it's refreshing to see this book acknowledging the difference between allocation and apportionment, for example.

There, I've got that off my chest now but I have to say that they got zero base budgeting wrong, calling it zero based. At least they didn't call it zero budgeting as is to be found in A level Business Studies syllabuses.

This is a short and snappy book and I think it's well written. It's just uner 200 pages ong and it's quite a bit less than A4 in size too. I found it easy to read this book continuously as the majority of the explanations were well set out and logically discussed. There are many examples to work through and whilst they are easy to read I have to say that some of them are not especially realistic. For example, early in the book there is a fairly simple exercise to do that purports to be a cost accounting question based on the production of, ahem, missiles!

I'm all for reality and a variety of situations being covered; but missiles!

The book covers a lot of the ground that anyone studying cost accounting for the first time would expect: what is cost accounting, essentials of the terminology. cost behaviour, accounting for labour then materials and then overheads. On page nine there is a useful cost classification diagram that is ironically a little different from most that you will find. The irony is that the authors have called it the most commonly used classification.

I have to admit that I have impertinently edited the diagram to add the direct expenses that Russell et al missed off. Actually, not so impertinent since they do mention direct expenses in their text but then strangely miss it off their diagram.

The book then continues with the following topics

• Activity Based Costing
• Marginal costing systems
• Marginal costing short term decision making
• Planning and budgeting
• Standard costing and variance analysis
• Capital investment appraisal

Every chapter follows a simple and straightforward pattern: beginning with objectives, developing the materials with examples, concluding with a chapter summary and then leaving us with additional questions, several of which have solutions at the end of the book.

Is anything missing from this book? Yes, most definitely. Since it is aimed at professional level students inter alia, I think there aren't enough questions at the end of the chapters. Anyone preparing for a tough professional exam, or even A level accounting, needs lots of practice: they don't get it here.

I would have thought these days that it's a must for text books like this to incorporate information technology into the text: the most obvious way of doing that is by way of spreadsheet based examples. You will need to search hard to find them. Not everyone will find this to be a great loss but building a spreadsheet can be a fantastic way of learning and understanding complex relationships and ideas such as those explored in this book.

You will find a brief mention of spreadsheets in the chapter on budgeting!

Very strangely, there is no specific order costing: job, batch and process costing. I really do find this very strange but the authors say that this book is not the place for them as they could only do them cursorily so please look else where. I disagree!

Overall, I like this book as a very useful addition to my library and would strongly recommend it to A level accounting students and, in spite of my reservation on the number of end of chapter questions, early professional level cost accounting students.

 

© Duncan Williamson
11th July 2006

© Webmaster Duncan Williamson 2006