Cost Accounting

Cover Contents List of Illustrations Preface Part I: Cost Accounting Fundamentals Chapter 1: Cost Accounting—An Overview (General Principles) 1.1 Meaning of Cost Accounting 1.2 Objectives of Cost Accounting 1.3 Advantages of Cost Accounting 1.4 Cost Accounting and other Branches of Accounting 1.4.1 Cost Accounting and Management Accounting 1.5 Concepts of Cost 1.6 Classification of Costs 1.6.1 Classification on the Basis of Time 1.6.2 Classification by Nature or Elements 1.6.3 Overheads 1.6.4 Association with the Product (Costs in Their Relation to Product) 1.6.5 Accounting Period-Wise Classification of Costs 1.6.6 Behaviour-Wise Classification of Costs 1.6.7 Functional Classification of Costs 1.6.8 Costs for Planning and Control 1.6.9 Costs for Analytical and Decision-Making Purposes 1.6.10 Other Costs 1.7 Cost Objects 1.7.1 Cost Unit 1.7.2 Cost Centre 1.7.3 Profit Centre 1.8 Methods of Costing 1.8.1 Process Costing 1.8.2 Specific Order Costing 1.9 Techniques of Costing 1.10 Elements of Cost 1.10.1 Material 1.11 Installation of a Costing System 1.11.1 Practical Difficulties in Installing a Costing System 1.11.2 Measures to Overcome Difficulties 1.12 Role of a Cost Accountant in an Organization Key Terms Question Bank Objective Type Questions Short Answer Questions Essay Type Questions Exercises Part II: Elements of Cost Chapter 2: Direct Materials 2.1 Direct Materials 2.1.1 Meaning of Direct Material and Its Constituents 2.1.2 Indirect Materials 2.2 Purchasing Function 2.2.1 Objectives of Purchase Department 2.2.2 Methods of Purchasing 2.3 Purchase Procedure 2.3.1 Stage I: Indenting for Materials 2.3.2 Stage II: Issue of Tenders 2.3.3 Stage III: Receiving Quotations 2.3.4 Stage IV: Placing Purchase Orders 2.3.5 Stage V: Inspecting Stores Received 2.3.6 Stage VI: Receiving Stores 2.3.7 Stage VII: Passing Bills for Payment 2.4 Pricing of Stores Receipts (Accounting for Direct Material Cost) 2.4.1 Joint Purchase Costs 2.4.2 Storage and Issue Losses 2.5 Stores Functions 2.5.1 Main Objectives of Store Keeping 2.5.2 Duties and Functions of a Store Keeper 2.5.3 Centralized Stores 2.5.4 Imprest Stores 2.6 Classification and Codification of Materials 2.6.1 Some Important Methods of Codification of Materials 2.6.2 Advantages of Codification 2.7 Inventory Control 2.7.1 Meaning of Inventory Control 2.7.2 Techniques of Inventory Control 2.7.3 Economic Order Quantity (EOQ) 2.7.4 Quantity Discounts and EOQ 2.8 Fixation of Stock Levels 2.8.1 Maximum Stock Level 2.8.2 Minimum Stock Level 2.8.3 Danger (or) Safety Level 2.8.4 Ordering Level (or) Re-Order Level 2.9 ABC Analysis 2.9.1 Steps Involved in ABC Analysis 2.10 VED Analysis 2.11 Pareto Analysis 2.12 FNSD Analysis 2.13 Two Bin System 2.14 Continuous Stock Taking 2.14.1 Advantages of Continuous Stock Taking 2.15 Perpetual Inventory System 2.15.1 Advantages of Perpetual Inventory System 2.16 Bin Card 2.17 Stores Ledger 2.17.1 Differences between Bin Card and Stores Ledger 2.18 Periodic Stock Taking System 2.19 Control Ratio—Inventory Turnover Ratio 2.19.1 Advantages of Inventory Turnover Ratio 2.20 Issue of Materials 2.20.1 Factors to Be Considered on Issue of Materials 2.20.2 Material Requisition Note 2.20.3 Bill of Materials 2.20.4 Material Return Note 2.20.5 Material Transfer Note 2.20.6 Kardex System 2.21 Pricing of Material Issues 2.21.1 Specific Price Method 2.21.2 First in First Out Method 2.21.3 Last in First Out Method (LIFO) 2.21.4 Highest in First Out Method (HIFO) 2.21.5 Base Stock Method 2.21.6 Next-in-First Out Method 2.21.7 Simple Average Method 2.21.8 Periodic Simple Average Price Method 2.21.9 Weighted Average Price Method 2.21.10 Periodic Weighted Average Method 2.21.11 Moving Simple Average Price Method 2.21.12 Moving Weighted Average Price Method 2.21.13 Standard Cost Method (or) Standard Price Method 2.21.14 Inflated Price Method 2.21.15 Market Price Method 2.21.16 Selection of Material Pricing Method 2.22 Pricing of Material Returns 2.22.1 Pricing of Materials Returned to Vendor 2.22.2 Pricing of Materials Returned to Stock Room 2.23 Material Losses 2.23.1 Scrap 2.23.2 Waste 2.23.3 Spoiled Work 2.23.4 Defective Work Summary Key Terms Question Bank Objective Type Questions Short Answer Questions Essay Type Questions Exercises Chapter 3: Direct Labour and Direct Expenses 3.1 Meaning and Defi nition of Labour Cost 3.1.1 Direct Labour Cost 3.1.2 Indirect Labour Cost 3.2 Time-Recording 3.2.1 Time-Keeping 3.2.2 Time-Booking 3.3 Labour Time-Records 3.3.1 Clock-Card 3.3.2 Job Cards 3.3.3 Time-Ticket 3.3.4 Piece-Work Tickets 3.3.5 The Check or Disc Method 3.4 Accounting of Labour Cost 3.4.1 Monetary Benefits 3.4.2 Non-Monetary Benefits 3.4.3 Deferred Monetary Benefits or Terminal Benefits 3.4.4 Accounting of Labour Cost 3.5 Types of Workers 3.5.1 Casual Workers 3.5.2 Outworkers 3.5.3 Hired Workers 3.6 Work Study 3.6.1 Motion Study 3.6.2 Time Study 3.6.3 Method Study 3.7 Job Evaluation and Merit Rating 3.7.1 Job Evaluation 3.7.2 Methods of Job Evaluation 3.8 Labour Remuneration 3.8.1 Principles of Labour Remuneration 3.8.2 Methods of Remuneration 3.8.3 Taylor’s Differential Piece-Rate Method 3.8.4 Merrick’s Differential Rate Scheme (or) Multiple Piece-Rate System 3.8.5 Gantt’s Task and Bonus Plan 3.8.6 Baum’s Differential Scheme (or) Milwakee Scheme 3.9 Premium Bonus Plans 3.9.1 Emerson’s Efficiency System (or) Empiric System 3.9.2 Bedauxe Scheme or Points Scheme 3.9.3 Barth Scheme 3.9.4 Halsey Scheme 3.9.5 Halsey–Weir Scheme 3.9.6 Rowan Scheme 3.10 Group-Bonus Plans or Schemes 3.10.1 Priestman’s Production Bonus Plan 3.10.2 Rucker’s Plan 3.10.3 Scalon Plan 3.10.4 Towne’s Gain-Sharing Plan 3.10.5 Budgeted Expenses Bonus 3.11 Incentive Plans for Indirect Workers 3.11.1 Principles Governing the Incentive Plan for Indirect Workers are 3.11.2 Indirect Monetary Incentive Schemes 3.11.3 Monetary (Indirect) Schemes 3.12 Co-Partnership 3.12.1 Other Non-Monetary Incentive Schemes 3.13 Labour Turnover 3.13.1 Causes of Labour Turnover 3.13.2 Avoidable Causes 3.13.3 Unavoidable Causes 3.13.4 Effects of Labour Turnover 3.13.5 Measurement of Labour Turnover 3.13.6 Cost-Labour Turnover 3.14 Idle Time 3.14.1 Causes of Idle Time 3.14.2 The Grouping of Categories According to Functions May Further be Classified as Follows 3.14.3 Accounting Treatment 3.14.4 Control of Idle Time 3.15 Overtime and Shift Work 3.15.1 Meaning of Overtime 3.15.2 Causes of Overtime 3.15.3 Disadvantages of Overtime 3.15.4 Control of Overtime 3.15.5 Accounting of Overtime 3.16 Direct Expenses 3.16.1 Meaning and Examples of Direct Expenses 3.16.2 Accounting Treatment of Direct Expenses Summary Key Terms Question Bank Objective Type Questions Short Answer Questions Essay Questions Exercises Chapter 4: Overheads Classification, Distribution and Control 4.1 Meaning and Definition of Overheads 4.2 Classification of Overheads 4.2.1 Functional Classification 4.2.2 Element-Wise Classification 4.2.3 Behaviour-Wise Classification 4.3 Methods of Segregating Semi-Variable Costs into Fixed and Variable Costs 4.3.1 Method 1: (Technique 1) Levels of Output Compared with the Levels of Expenses Method 4.3.2 Method 2: High- and Low-Point Method: (or) Range Method 4.3.3 Method 3: Degree of Variability Method 4.3.4 Method 4: Scattergraph Method 4.3.5 Method 5: Method of Least Squares 4.4 Codification of Overheads 4.4.1 Numeric or Numerical or Straight-Number Coding 4.4.2 Alphabetical or Mnemonic Method 4.4.3 Alphabetical Cum Numerical Method 4.4.4 Decimal Method 4.4.5 Field Method 4.4.6 Advantages of Codification of Accounts 4.5 Distribution of Overheads 4.5.1 Stage I: Allocation of Overheads 4.5.2 Stage II: Apportionment of Overheads 4.6 Absorption of Factory Overhead 4.6.1 Methods of Overhead Absorption 4.7 Over Absorption or Under Absorption 4.7.1 Reasons for Under-Absorption of Overheads 4.7.2 Reasons for Over-Absorption of Overheads 4.7.3 Accounting Treatment of Over- or Under-Absorbed Overheads 4.8 Treatment of Certain Specific Items of Overheads in Costing 4.8.1 Packing Expenses 4.8.2 R&D Costs 4.8.3 Interest on Capital 4.8.4 Capacity Levels 4.8.5 Capacity Costs 4.8.6 Capacity Ratios Summary Key Terms Question Bank Objective Questions Short Answer Questions Essay Questions Exercises Chapter 5: Administration Selling and Distribution Overheads 5.1 Administration Overheads 5.2 Accounting for Administration Overhead 5.2.1 Separate Cost Item 5.2.2 Apportionment of Administration Overhead to Manufacturing, Selling and Distribution Functions 5.2.3 Transferring Administration Overhead to Costing Profi t and Loss Account 5.3 Control of Administration Overhead 5.3.1 Last Year’s Actual Overheads 5.3.2 Budgeted Overheads 5.3.3 Standards 5.4 Selling and Distribution Overhead 5.4.1 Selling Overheads 5.4.2 Distribution Overheads 5.4.3 Accounting for Selling and Distribution Overheads 5.4.4 Control of Selling and Distribution Overheads 5.4.5 Distinction between Production Overhead and Selling and Distribution Overhead Summary Question Bank Objective Questions Short Answer Questions Essay Questions Exercises Part III: Costing Methods Chapter 6: Activity-based Costing (Cost Allocation) System 6.1 Meaning and Definitions 6.2 Key Terms 6.2.1 Cost Objects 6.2.2 Activities 6.2.3 Cost Pool 6.2.4 Cost Drivers 6.2.5 Cost Hierarchies 6.3 Salient Features of Activity-based Costing System 6.4 Implementation of Activity-based Costing System 6.5 Comparing ABC System with Traditional Costing System 6.6 Limitations of ABC System Summary Key Terms Question Bank Objective Questions Short Answer Questions Essay Questions Chapter 7: Single Costing* 7.1 Unit Costing 7.2 Features of Output Costing 7.3 Analysis of Cost 7.4 Cost Sheet 7.4.1 Historical Cost Sheet 7.4.2 Estimated Cost Sheet 7.4.3 Uses of Cost Sheet 7.4.4 Exclusion of Certain Items from Cost Sheet 7.5 Production Account 7.6 Difference between Cost Sheet and Production Account 7.7 Preparation of a Cost Sheet 7.7.1 Stock 7.7.2 Computation of Profit 7.8 Treatment of Scrap 7.8.1 Treatment of Spoilage and Defective Work 7.9 Preparation of Production Account 7.10 For Professional Courses Summary Key Terms Question Bank Objective Type Questions Short Answer Questions Essay Type Questions Exercises Chapter 8: Job Costing and Batch Costing 8.1 Meaning and Definition of Job Costing 8.2 Features of Job Costing 8.3 Objectives of Job Costing 8.4 Procedure of Job Costing 8.4.1 Step 1: Pre-production Procedure 8.4.2 Step 2: Allotment of Job Number 8.4.3 Step 3: Issuance of Production Order 8.4.4 Step 4: Maintenance of Job Cost Card 8.4.5 Step 5: Collection of Costs 8.4.6 Step 6: Job Cost Analysis 8.4.7 Step 7: Job Cost Book-Keeping 8.4.8 Accounting for Work-in-Process 8.5 Batch Costing 8.5.1 Special Features of Batch Costing 8.5.2 Economic Batch Quantity (EBQ) 8.5.3 Economic Batch Quantity: Meaning and Method of Determination 8.5.4 Factors Determining EBQ 8.6 Back Flush Costing 8.6.1 Version 1 (Method 1) 8.6.2 Version 2 (Method 2) 8.6.3 Versions 3 (Method 3) Summary Key Terms Question Bank Objective-Type Questions Short Answer Questions Essay Questions Exercises Chapter 9: Contract Costing 9.1 Meaning and Definition of Contract Costing 9.2 Special Features of Contract Costing 9.3 Contract-Costing Procedure 9.3.1 Accounting for Material 9.3.2 Accounting for Labour 9.3.3 Accounting for the Use of Plant 9.3.4 Accounting for Overheads (Indirect Expenses) 9.3.5 Accounting for Sub-Contracts 9.4 Types of Contracts 9.4.1 Fixed-Price Contract with Escalation Clause 9.4.2 Cost-Plus Contracts 9.4.3 Advantages 9.4.4 Disadvantages 9.4.5 Incomplete Contracts and Profit 9.5 Guidelines to Assess Profit on Incomplete Contracts 9.6 Work-In-Progress 9.7 Accounting Treatment Summary Key Terms Question Bank Objective Questions Short-Answer Questions Essay Questions Exercises Chapter 10: Process Costing 10.1 Meaning and Definition of Process Costing 10.2 Salient Features of Process Costing 10.2.1 Costs Flow From One Process to Another 10.2.2 Average Unit Cost Consumption 10.2.3 Not Distinguishable 10.2.4 Normal Spoilage 10.2.5 Equivalent Production Computation 10.2.6 Work-in-Progress (WIP) at Year End 10.2.7 Emergence of More Than One Product 10.3 Job Costing vs. Process Costing 10.4 Process Losses and Gains 10.4.1 Normal Process Loss 10.4.2 Abnormal Loss 10.4.3 Abnormal Gain 10.5 Elements of Manufacturing Cost 10.5.1 Direct Materials 10.5.2 Direct Labour 10.5.3 Direct Expenses 10.5.4 Overheads 10.6 Equivalent Production 10.6.1 Procedure for the Determination of “Equivalent Production” 10.7 Joint Products and By-Products 10.7.1 Joint Products 10.7.2 By-Products 10.7.3 Co-Products 10.7.4 Differences Between Joint Products and By-Products 10.8 Accounting for Joint Product Costs 10.8.1 Average Unit Cost Method 10.8.2 Method 2: Physical Measure Method 10.8.3 Method 3: Weighted Output Method 10.8.4 Method 4: Standard Cost Method 10.8.5 Method 5: Market Value Method (Sales Value Method) 10.8.6 Method 6: Realizable Value Method 10.9 Accounting for By-Products 10.9.1 Cost Methods: The Following are the Cost Methods 10.9.2 Non-Cost Methods 10.10 Transfer Prices—Inter-Process Profits 10.10.1 Inter-Process Profits 10.10.2 Advantages 10.10.3 Disadvantages Summary Key Terms Question Bank Objective Questions Short Answer Questions Essay Questions Exercises Chapter 11: Operating Costing or Service Costing 11.1 Meaning of Operating Costing or Service Costing 11.2 Features of Service Costing 11.3 Users of Service Costing 11.4 Cost Unit 11.5 Cost Analysis 11.6 Transport Costing 11.6.1 Objectives of Motor Transport Costing 11.6.2 Collection of Cost Data 11.6.3 Records 11.7 Boiler House Costing 11.7.1 Boiler House Engaging in Steam Production 11.7.2 Collection of Cost Data 11.7.3 Cost Unit 11.8 Hospital Costing 11.9 Staff Canteen Costing 11.10 For Professional Courses 11.11 Operation Costing Summary Key Terms Question Bank Objective-Type Questions Short Answer Questions Essay Questions Exercises Chapter 12: Reconciliation of Cost and Financial Accounts 12.1 Need for Reconciliation 12.2 Causes of Difference 12.2.1 Items Shown Only in Financial Accounts 12.2.2 Items Included in Cost Accounts Only 12.2.3 Items Treated Differently in Cost Accounts and Financial Accounts 12.3 Procedure for Reconciliation of Cost and Financial Accounts 12.3.1 Proforma: Reconciliation Statement 12.3.2 Memorandum Reconciliation Account Summary Key Terms Question Bank Objective-Type Questions Short Answer Questions Essay Questions Exercises Part IV: Cost Allocation and Accumulation Chapter 13: Integrated Accounting System 13.1 Meaning of Integrated Accounting System 13.2 Advantages of Integral System of Accounting 13.3 Disadvantages 13.4 Prerequisites for Successful Integrated System of Accounting 13.5 Accounting Treatment 13.6 The Third Entry Method 13.7 Interlocking vs. Integration of Cost and Financial Accounts Summary Key Terms Question Bank Objective-Type Questions Short Answer Questions Essay Questions Exercises Part V: Costing for Planning and Control Chapter 14: Budgetary Control 14.1 Meaning and Definition of Budget, Budgeting and Budgetary Control 14.2 Forecast and Budget 14.3 Objectives of Budgetary Control 14.4 Advantages of Budgetary Control 14.5 Limitations of Budgetary Control 14.6 Prerequisites for the Adoption of Budgetary Control System 14.7 Installation of Budgetary Control System 14.8 Budget Factor or Key Factor 14.9 Budget Reports 14.10 Classification of Budgets 14.10.1 Functional and Master Budgets 14.11 Cash Budget 14.11.1 Meaning and Definition 14.11.2 Preparation of Cash Budget 14.12 Master Budget 14.13 Classification of Budgets 14.13.1 Fixed Budget 14.13.2 Flexible Budget 14.14 Control Ratios 14.15 Responsibility Accounting 14.15.1 Controllable and Uncontrollable Costs 14.15.2 Responsibility Centres vs. Cost Centres Summary Key Terms Question Bank Objective Type Questions Short Answer Questions Essay Type Questions Exercises Chapter 15: Standard Costing and Variance Analysis 15.1 Meaning and Definition of Standard, Standard Cost and Standard Costing 15.2 Features of a Standard Costing System 15.3 Standard Costing and Budgetary Control 15.4 Standard Costs and Estimated Costs 15.5 Advantages of Standard Costing 15.6 Limitations of Standard Costing 15.7 Prerequisites for Installation of Standard-Costing System 15.8 Types of Standards 15.9 Kinds of Standards 15.9.1 Direct Material Cost Standards 15.9.2 Direct Wages Standards 15.9.3 Production Overhead Standards 15.10 Concept of Standard Hour: Variance Ratios 15.10.1 Standard Hour 15.10.2 Activity Ratio 15.10.3 Efficiency Ratio 15.10.4 Capacity Ratio 15.11 Analysis of Variances 15.11.1 Meaning and Definition of Variance Analysis 15.11.2 Variance Analysis 15.11.3 Variance Accounting 15.11.4 Principles of Variance Analysis 15.11.5 Chart of Variances 15.12 Direct Material Cost Variance Analysis 15.12.1 Material-Price Variance 15.12.2 Material-Usage Variance (or) Quantity Variance 15.12.3 Material-Mix Variance 15.12.4 Material-Yield Variance 15.13 Direct Labour-Cost Variance Analysis 15.13.1 Direct Labour Cost Variance 15.13.2 Direct Labour Rate Variance 15.13.3 Direct Labour Time or Efficiency Variance 15.13.4 Direct-Labour Idle-Time Variance 15.13.5 Direct-Labour-Mix Variance (Group Composition) 15.13.6 Direct-Labour-Yield Variance 15.14 Overhead Variances 15.14.1 Variable-Overhead Variance Analysis 15.14.2 Variable-Overhead-Effi ciency Variance 15.15 Fixed Overhead Variance Analysis 15.15.1 Fixed Overhead Variance 15.15.2 Fixed Overhead-Expenditure Variance 15.15.3 Volume Variance 15.15.4 Fixed Overhead-Capacity Variance 15.15.5 Fixed Overhead Calendar Variance 15.15.6 Fixed Overhead-Efficiency Variance 15.16 Revision Variance 15.17 Sales Variances 15.17.1 Sales Variances with Reference to Profit Method 15.17.2 (a) Sales-Price Variance 15.17.3 Sales-Volume Variance 15.17.4 Sales-Mix Variance 15.17.5 Sales-Quantity Variance 15.18 Sales Variances—(Based on Turnover)—Turnover Method 15.18.1 Sales Value Variance 15.18.2 Sales-Quantity Variance 15.19 Reporting of Variances to Management 15.19.1 Reporting of Variances to Management 15.20 Treatment of Variances in Cost Accounts Summary Key Terms Question Bank Objective Type Questions Short Answer Questions Essay Type Questions Exercises Exercises Part VI: Costing for Decision and Control Purposes Chapter 16: Marginal Costing 16.1 Marginal Cost 16.1.1 Concept of Marginal Cost—View of Economists and Accountants 16.2 Absorption Costing 16.2.1 Salient Features of “Absorption Costing” 16.3 Marginal Costing 16.3.1 Salient Features of Marginal Costing 16.4 Contribution of Gross Margin 16.4.1 Meaning and Method of Computing Contribution 16.5 Ascertainment of Income (Profit) under Marginal-Costing and Absorption-Costing Techniques 16.5.1 Marginal Costing 16.5.2 Absorption Costing 16.6 Segregation of Semi-Variable Overheads 16.6.1 Method 1: Levels of Output Compared to Levels of Expenses 16.6.2 Method 2: Range Method or “High and Low” Method 16.6.3 Method 3: Degree of Variability Method 16.6.4 Method 4: Equation Method 16.6.5 Method 5: Method of Least Squares 16.6.6 Method 6: Scattergraph Method 16.7 Advantages of Marginal Costing 16.8 Disadvantages of Marginal Costing 16.9 Managerial Applications of Marginal Costing 16.9.1 Optimizing the Product Mix 16.9.2 Problems of Limiting Factor or Key Factor 16.9.3 Make or Buy Decisions 16.9.4 Opportunity Cost* 16.9.5 Profit Planning 16.9.6 Shut-Down Decisions 16.9.8 Product Pricing—Fixation of Selling Prices 16.9.9 Decision on Manufacturing Methods 16.9.10 Maintaining a Desired Level of Profit 16.9.11 Production and Market-Expansion Decisions 16.9.12 Offering Quotations 16.10 Special Circumstances in which the Selling Price at or Below the Marginal Cost is Justified Chapter Review Key Terms References Formulae Pertaining to Marginal Costing Question Bank Objective Type Questions Short Answer Questions Essay Type Questions Exercises Chapter 17: Break-Even and Cost–Volume–Profi t Analysis 17.1 Features and Formulae for Profit–Volume Ratio 17.1.1 Ways to Increase P/ V Ratio 17.1.2 Results of Analysis (After Taking into Account the Various Limiting Factors) 17.2 Cost–Volume–Profit Analysis 17.2.1 Definition of CVP Analysis 17.3 Objectives (Utility) of CVP Analysis 17.4 Break-Even Analysis 17.4.1 Assumptions Underlying Break-Even Analysis 17.4.2 Break-Even Point 17.5 Concept of Some Important Terms 17.5.1 Cost BEP 17.5.2 Cash BEP 17.5.3 Composite BEP 17.6 Profit-Path Graph 17.7 Margin of Safety 17.8 Angle of Incidence 17.8.1 Meaning and Significance 17.9 Impact of Variable Cost, Fixed Cost and Selling Price on Contribution, P/ V Ratio, BEP and Margin of Safety 17.10 Applications of CVP Analysis 17.11 Models 17.12 For Professional Course Students 17.13 Limitations of Break-Even Analysis 17.14 Uses of CVP Analysis Summary Key Terms Bibliography Formulae Question Bank Objective Type Questions Short Answer Questions Essay Questions Exercises Chapter 18: Differential Cost Analysis 18.1 Meaning and Definition of Differential Cost Analysis 18.2 Salient Features of Differential Cost Analysis 18.3 Marginal Costing vs. Differential Cost Analysis 18.3.1 Similarities between Marginal Costing and Differential Costing 18.3.2 Differences Between Marginal Costing and Diff erential Costing 18.4 Applications of Differential Cost Analysis or Utilities of Differential Cost Analysis 18.5 Opportunity Costing 18.5.1 Features of Opportunity Costs Summary Key Terms Bibliography Question Bank Objective Questions Short Answer Questions Essay Questions Exercises