Advanced cost management

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This is the advanced cost management. How the cost influence in taking decisions.It comes under the field operations. Tells about what type of process or activity is required to produce a particular product in a manufacturing unit. There are many process to do a particular job and choosing the one which have the huge benefit depends on the advanced cost management

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Advanced cost management

  1. 1. -by Sruthe SS(12Ac36) PSG Institute Of Management.
  2. 2. Introduction Cost accounting is a process of collecting, analyzing,  summarizing and evaluating various alternative  courses of action.  Its goal is to advise the management on the most  appropriate course of action based on the cost  efficiency and capability. 
  3. 3. Needs of cost accounting To Ensure Optimum Utilisation of Resources To Achieve Overall Efficiency of Business To Overcome the Limitations of Financial Accounting a. b. c. d. It provides only past data It reveals only overall results of the business It is static in nature It fails to take into account the change in price level
  4. 4. Nature of cost and management accounting:  Is a branch of knowledge  Is a branch of science  Is an art  It’s a profession
  5. 5. Similarities of cost accounting and financial accounting  The fundamental principle of double entry Recording transactions using invoices and vouchers The results of business are revealed The causes for loses and wastages are provided Accuracy of accounts are maintained.
  6. 6. Dissimilarities Cost Accounting Financial Accounting Accounting aims at computing cost of production/service in a scientific manner and facilitate cost control and cost reduction Aims to find out the results as profit and loss and balance sheet Internal reporting is made External Reporting is made Maintained voluntarily Maintained Compulasrily Cost classification based on type of transactions classification is basically on the basis of functions, activities, products, process and on internal planning and control and information needs of the organization.
  7. 7. In decision Making Used by the managers in taking decision regarding products, process and activities. Strategic and tactical long run and short run
  8. 8. Scope of Cost accounting Costing The technique and process of costing b. Ascertainment of cost a. Cost Accounting Cost Control Budgeting Cost Audit
  9. 9. Classification of Costs By Element By Nature or Traceability By Functions: By Behavior By control ability By normality By Time
  10. 10. Types of cost Unit Costing Job Costing Activity Based costing Target Costing Operational Costing Lean costing Life Cycle costing
  11. 11. Element of cost Raw Material Labour Overhead

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