COST ACCOUNTING   BY B.K. VASHISHTHA
Introduction and subjects   Cost accounting is the application of    costing & cost accounting principle,    methods & te...
Aspects   Cost accounting   Costing   Budgetary control   Cost control   Cost analysis   Cost audit
Cost accounting   Cost accounting is the formal    mechanism by means of which    cost of products or services are    asc...
Costing   Costing is the technique and    process of ascertaining costs.           It should not be confused    with the ...
Budgetary control   It is a means of control in which    the actual state of affair is    compared with that planned for ...
Cost controlIt includes : planning, communication, motivation, reporting, and decision making.   A suitable cost cont...
Cost analysis   Cost are properly analyzed    according to behaviour.   Examples: fixed, variable and    semi-variable o...
Cost audit   It is the verification of the    correctness of cost accounts    and check on the adherence of    the cost a...
Elements of costMaterial-This is the cost of commodities and materials used by the organization.Direct material- which be...
Elements of cost Labour-cost of remuneration  paid to the employees of the  organisation.Direct-the labour cost which can...
Elements of cost Expenses- cost of service  provided to the organization  including (Assets cost)Direct exp.- Hire charge...
   The aggregate of Direct Material    cost, Direct Labour cost and    Direct expenses is termed as    ‘PRIME COST’   Th...
COST CENTRE   Cost center is defined as a    location, person, or time of    equipment in or connected with    an underta...
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Cost accounting

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Cost accounting

  1. 1. COST ACCOUNTING BY B.K. VASHISHTHA
  2. 2. Introduction and subjects Cost accounting is the application of costing & cost accounting principle, methods & technique of the science, art and practice of the cost control ascertainment of profitability. It also includes the presentation of information derived for the purpose of managerial decision making. It is thus the science art & practice of a cost accountant.
  3. 3. Aspects Cost accounting Costing Budgetary control Cost control Cost analysis Cost audit
  4. 4. Cost accounting Cost accounting is the formal mechanism by means of which cost of products or services are ascertained and controlled. It is a part of MIS which analyses past, present and future data to provide the basis for managerial action.
  5. 5. Costing Costing is the technique and process of ascertaining costs. It should not be confused with the cost accounting . Costing can be carried out by the process of arithmetic , but the cost accounting denotes the formal mechanism by means of which cost are ascertained.
  6. 6. Budgetary control It is a means of control in which the actual state of affair is compared with that planned for so as to obtain a measure of control over the operation and operating costs of that undertaking
  7. 7. Cost controlIt includes : planning, communication, motivation, reporting, and decision making. A suitable cost control system helps in maintaining expected return on capital employed, increasing productivity of men, machine and other resources, fixing price and economical stability of the organisation.
  8. 8. Cost analysis Cost are properly analyzed according to behaviour. Examples: fixed, variable and semi-variable or relevancy e.g. relevant cost or irrelevant cost for the purpose of managerial decision making, such as make or buy, replacement of plant and introducing a second shift, etc.
  9. 9. Cost audit It is the verification of the correctness of cost accounts and check on the adherence of the cost accounting plan. It is essential where cost accounting is carried out on a large scale .
  10. 10. Elements of costMaterial-This is the cost of commodities and materials used by the organization.Direct material- which becomes integral part of finished goodsIndirect material- can’t be identified with the individual cost centre as lubricants, stationery, consumable goods etc.
  11. 11. Elements of cost Labour-cost of remuneration paid to the employees of the organisation.Direct-the labour cost which can be identified with the cost centreIndirect- which can’t be identified with the cost centre as storekeeper’s salary etc.
  12. 12. Elements of cost Expenses- cost of service provided to the organization including (Assets cost)Direct exp.- Hire charges of machinery etcIndirect- Rent, Telephone bill etc.
  13. 13.  The aggregate of Direct Material cost, Direct Labour cost and Direct expenses is termed as ‘PRIME COST’ The aggregate of Indirect Material cost, Indirect Labour cost and Indirect expenses is termed as ‘overheads’
  14. 14. COST CENTRE Cost center is defined as a location, person, or time of equipment in or connected with an undertaking, in relation to which cost may be ascertained and used for the purpose of cost control. Impersonal & personal Production and service

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