Upload
vikas-rock
View
27
Download
0
Embed Size (px)
DESCRIPTION
;k;k;kl;k;lk;lgk;lfkg;ldfk;glkdf;kg;kdf;gk;lfdgkldf;gkd;lfkg;ldfk;lgkdl;kg;lfk;lgkd;kg;lkg;ldfk;glkdf;lgkdf;lgk;lkg;ldfk;lgkdfglkdf;lgkd;kg;ldfkg;ldk;glkdf;lgk;dk;gd;lkg;l;dlkg;lgkdgkdf;lgkfd;kg;ldfkg;ldfk;gldfk;gkdfkg;]df;k;gdfgkdflkg;ldfkgkdfl;gkdflg;dfgk;dfkg;ldfk;lgkdf;lgkd;flkg;dlkg;dfkg;lfdk;lgkfdk;g;ldfkgkdf;kgf;kg;ldkg;dkk;df;lkg;dfk;;lkg;ldgkl
Citation preview
COST ACCOUNTING
Cost Cost is the amount of expenditure incurred on or attributable to a given thing. Cost is the amount measured in money of cash expended or other property transferred capital stock issued, service performed or a liability incurred in consideration of goods or services received or to be received.
Objectives of Cost AccountingDetermining the selling priceDetermining and controlling efficiencyFacilitating preparation of financial & other statementsProviding basis for operating policyMake or buy decisionCost volume profit relationshipShutting down or operating at loss etc
Elements of CostMaterialDirect materialIndirect materialLabourDirect labourIndirect labourExpensesDirect expensesIndirect expensesOverheadsFactory O/HOffice and administration O/HSelling and distribution O/H
Components of TCPrime / Direct / First cost = DM + DL + DEFactory / Works Cost = PC + Works / Factory expenses Office cost / Cost of Production = FC + Administration expenses Total cost / cost of sales = office cost + selling & dist expenses
CLASSIFICATION OF COST
classification by nature or element Functional Classification Classification on the basis of behaviourClassification on the basis of association of product Classification for managerial decisions and control.
A. Classification by nature or element
B: FUNCTIONAL CLASSIFICATION Prime Cost = DM + DL + DE Factory / Works Cost = PC + Works / Factory expenses Office cost / Cost of production = FC + Adm. expenses Total cost / cost of sales = office cost + selling & Dist expenses
C:Classification on the basis of Behaviour Variable cost Fixed cost Semi-variable cost
D:Classification on the basis of association of productProduct costPeriod cost
E: Classification of Cost for Managerial Decisions and Control
Controllable and Uncontrollable costsNormal and abnormal costsAvoidable and unavoidable costShut down and sunk costProduct costs and period costsDifferential, incremental and decremental cost. Out of pocket costMarginal costOpportunity costsConversion CostsBudget cost and standard costsImputed /Hypothetical costsRelevant and Irrelevant Cost
METHOD / TECHNIQUES / SYSTEMS1.Job Costing2.Process Costing3.Multiple or Composite Costing
METHOD / TECHNIQUES1.Job Costing:Specific Order or job not comparable with each othereg Ship or boat or batch
Methods:Batch costing Contract costing Departmental costing
METHOD / TECHNIQUESProcess CostingWhere product passes through different processes, each distinct and well defined.
Methods:Operating costing: Used for services, eg railways, hotels) Unit/single/output costing: Used where production is continuous and uniform. Eg cement industry, paper mill.Operation costing: Used in industries engaged in repetitive mass production. Eg toy making, engineering industries,
METHOD / TECHNIQUESMultiple or Composite Costing: Application of more than one method.Techniques:Marginal CostingUniform costing Standard costingAbsorption or full costingDirect costingHistorical costing Cost plus costing
COST SHEET
INSTALLATION OF A COSTING SYSTEM1) Objective to be achieved.2) Study the Product.3) Study the organization.4)Selecting the Cost Rates.5) Introduction of the System.6) A Follow-up.
Difficulties in Installing a Costing System1) Lack of Support from top mgmt. 2) Resistance from the existing staff.3) Non-Co-operation at other levels.4) Shortage of Trained Staff.5) Heavy Costs.
Considerations for Introducing Costing SystemThe productSize & type of organizationObjectives of costing systemTechnical detailsInformative and simpleMethods of maintenance of cost recordsElasticity
TermsCost unitCost centreCost estimationCost ascertainmentCost allocationCost apportionment
END OF CHAPTER