LCCI Cost Accounting Second Level(2016)-Series 2,3 & 4

The aim of the examination is to test the candidate’s knowledge and understanding of

  • The purposes of cost accounting, the terminology used and the methods by which the costs of operations, processes, departments, products or services are ascertained using the absorption principle
  • Elementary aspects of the marginal principle, optional technique and costing systems


1.0 General

  • Cost units; Cost centres; Cost classification into direct or indirect by function or into cost behaviour categories; Elements of costs; Coding; Form Design; Accounting entries

2.0 Costing For Materials

  • Ordering; Receiving; Inspection; Storage and issue procedures. Documents involved in stores routine; Perpetual inventory records; Continuous stock taking and treatment of discrepancies; Method of pricing stores issues and effect on reported profits; Maximum stock, minimum stock and re-order levels

3.0 Costing For Labor

  • Time and output records; Methods of remuneration and effect on unit cost; Payroll preparation and wages analysis; Treatment of overtime premium, shift premium and idle time

4.0 Costing for Overhead

  • Main sources of total overheads, including depreciation, using a fixed asset registers: Use of production and service cost centres; Allocation: Apportionment; Re-apportionment of service cost centres. Basis for and calculation of absorption rtes; Use of absorption rates; Under or over absorption

5.0 Costing Methods for

  • Specific orders – Job, batch and contract
  • Continuous process- Normal loss. Scrap Value. Abnormal loss or gain; Work in progress; Equivalent units; Joint products & By products
  • Provision of services- Service organizations, both internal and external

6.0 Marginal Costing

  • Elementary knowledge of the use of contribution for decisions and the effect on stock values and reported profits

7.0 Optional Techniques

  • Elementary knowledge of budgeting and standard costing restricted to prime cost variance analysis

8.0 Costing Systems

  • Simple examples of integrated accounting systems. Basic understanding of uniform costing


  • A 2 ½- hour examination. 5 questions are to be answered from a choice of 6

Graph paper are provided. Calculators ( no printout, silent, cordless no word display facilities are allowed.

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