This document discusses cost accounting and the classification of costs. It explains that cost accounting involves classifying, recording, and allocating expenditures to determine the costs of products and services. There are three main elements of cost: material cost, labor cost, and overhead. Overhead includes indirect materials, indirect labor, and other expenses that cannot be directly traced to a product. The document then describes different ways to classify overhead, such as by function, behavior, element, or controllability. It also explains that overhead must be allocated to production and service departments.

1. SCHOOL OF AGRI-BUSINESS MANAGEMENT
“Nurturing Young Agri-Business Professionals for Evergreen Growth”
SCHOOL OF AGRI-BUSINESS MANAGEMENT
Sher-e-Kashmir University of Agricultural Sciences
and Technology of Jammu

2. TOPIC :Costing for Material, Labour and Overhead
Course Title– Managerial Accounting & Control

3. BRANCHES OF ACCOUNTING
BOOK-KEEPING
FINANCIAL ACCOUNTING
COST ACCOUNTING
MANAGEMENT ACCOUNTING

4. COST ACCOUNTING
COST ACCOUNTING IS THE
CLASSIFICATION,RECORDING, AND
APPROPRIATE ALLOCATION OF
EXPENDITURE FOR THE DETERMINATION OF
THE COSTS OF THE PRODUCT OR SERVICES

5. ELEMENT OF COST
MATERIAL
COST
DIRECT
MATERIAL
INDIRECT
MATERIAL
LABOUR
COST
DIRECT
LABOUR
INDIRECT
LABOUR
OVERHEAD
EXPENSES
DIRECT
EXPENSES
INDIRECT
EXPENSES

6. OVERHEAD
OVERHEAD MAY BE DEFINED AS THE COST
OF INDIRECT MATERIALS , INDIRECT LABOUR AND
SUCH OTHER EXPENSES INCLUDING SERVICES WHICH
CANNOT
CONVENIENTLY BE CHARGED TO A
SPECIFIC UNIT
(I.E. INDIRECT EXPENSES).

7. PRODUCTION OVERHEADS
Overheads means all indirect costs which
are part and parcel of the total cost of production.
But there is a great difficulty to know the amount
if indirect cost of which a final output should bear.
Because there is no direct relationship between
indirect cost(overhead) and the production.
Therefor through different stages of distribution
of oh these are finally charged(i.E.ABSORBED) to
the final output there are some stages to
distribute the overhead

8. CLASSIFIATION OF OVERHEAD
BY
FUNCTIONAL
BY
BEHAVIOURWISE
BY
ELEMENTWISE
Factory
exp.
Fixed
exp.
Ind.
material
Selling
exp.
Variable
exp.
Ind. Labour
Semi
variable
exp.
Ind.
expenses
Distribution
exp.
BY
CONTROLLABILITY
Controllable
exp.
Uncontrolla
-ble exp.

9. ALLOCATION OF COST
Allocation Of Overhead Means, Whole Items
Of Overheads Are Allocated To Production And
Service Departments. Cost Allocation Is Defined As
The Allotment Of Whole Items Of Cost To Cost
Centers Or Cost Unit
e.g. indirect wages of production
dept. ‘A’ is to be allocated to dept. ‘A’
only. Similarly, wages of service
dept. ’S’ is to be allocated to dept. ‘S’
only.