- The document presents Cost Accounting Standard 4 (CAS-4) on determining the cost of production for goods used for captive consumption in India.
- Captive consumption refers to when one division of a company consumes goods manufactured by another division to make another product. The cost of production is used to determine the assessable value for excise duty purposes.
- CAS-4 provides guidelines for calculating cost of production including material consumed, direct wages, overheads, research costs, and includes adjustments for opening and closing work-in-progress and finished goods inventory. It aims to bring uniformity to how companies determine cost of production for goods used captive consumption.
Raw Materials Inventory at April 30 = $4,000
b. Direct labor hours.......................................................... 1,200
Direct labor rate per hour............................................... × $15
Direct Labor Cost
This document provides information about a cost accounting course offered by Cost Academy. It includes contact information for the academy, a list of topics to be covered in the course, and the number of classes required for each topic. The total number of classes for the full course is 44. It also includes the syllabus for the Group II Paper 4 exam on Cost Accounting and Financial Management, which will cover cost accounting for 50 marks and financial management for 50 marks over three hours.
The Changing Role of Managerial Accounting in a GLOBAL Business EnvironmentAbdullah Rabaya
This document discusses basic cost management concepts and accounting for mass customization operations. It defines key cost terms like product costs, period costs and expenses. It also describes how costs are classified on financial statements and provides examples of manufacturing costs like direct material, direct labor and manufacturing overhead. The document shows schedules for calculating cost of goods manufactured and sold. It includes an example income statement for a manufacturer to illustrate how costs flow through the financial statements.
The document discusses the three basic elements of manufacturing costs: direct materials, direct labor, and factory overhead. Direct materials include all materials that become part of the finished product. Direct labor refers to personnel costs required for manufacturing. Factory overhead consists of all other costs required for manufacturing that do not fall into direct materials or labor, such as indirect labor, utilities, and depreciation. These three elements - direct materials, direct labor, and factory overhead - make up the total cost of production. Administrative and selling overheads are also discussed.
This document contains discussion questions and answers about cost accounting concepts. It defines key terms like cost, expenses, direct and indirect costs. It discusses cost objects, cost classification, cost behavior, and performance measurement. Non-financial measures are described as alternatives to traditional accounting measures for evaluating performance. The roles of the cost accountant are said to include defining and using various performance metrics beyond financial data.
This document provides information about an accounting course titled "Accounting for Business Decisions". It outlines the course objectives, topics to be covered, and components of a cost sheet. The objectives are to understand financial, cost, and management accounting and how they can facilitate decision making. Key topics to be covered include cost sheets, cost components, and cost accounting principles. The components of a cost sheet are defined as direct material, direct labor, direct expenses, and overhead costs.
Raw Materials Inventory at April 30 = $4,000
b. Direct labor hours.......................................................... 1,200
Direct labor rate per hour............................................... × $15
Direct Labor Cost
This document provides information about a cost accounting course offered by Cost Academy. It includes contact information for the academy, a list of topics to be covered in the course, and the number of classes required for each topic. The total number of classes for the full course is 44. It also includes the syllabus for the Group II Paper 4 exam on Cost Accounting and Financial Management, which will cover cost accounting for 50 marks and financial management for 50 marks over three hours.
The Changing Role of Managerial Accounting in a GLOBAL Business EnvironmentAbdullah Rabaya
This document discusses basic cost management concepts and accounting for mass customization operations. It defines key cost terms like product costs, period costs and expenses. It also describes how costs are classified on financial statements and provides examples of manufacturing costs like direct material, direct labor and manufacturing overhead. The document shows schedules for calculating cost of goods manufactured and sold. It includes an example income statement for a manufacturer to illustrate how costs flow through the financial statements.
The document discusses the three basic elements of manufacturing costs: direct materials, direct labor, and factory overhead. Direct materials include all materials that become part of the finished product. Direct labor refers to personnel costs required for manufacturing. Factory overhead consists of all other costs required for manufacturing that do not fall into direct materials or labor, such as indirect labor, utilities, and depreciation. These three elements - direct materials, direct labor, and factory overhead - make up the total cost of production. Administrative and selling overheads are also discussed.
This document contains discussion questions and answers about cost accounting concepts. It defines key terms like cost, expenses, direct and indirect costs. It discusses cost objects, cost classification, cost behavior, and performance measurement. Non-financial measures are described as alternatives to traditional accounting measures for evaluating performance. The roles of the cost accountant are said to include defining and using various performance metrics beyond financial data.
This document provides information about an accounting course titled "Accounting for Business Decisions". It outlines the course objectives, topics to be covered, and components of a cost sheet. The objectives are to understand financial, cost, and management accounting and how they can facilitate decision making. Key topics to be covered include cost sheets, cost components, and cost accounting principles. The components of a cost sheet are defined as direct material, direct labor, direct expenses, and overhead costs.
International Accounting Standard 2 (IAS 2) establishes the accounting treatment for inventories. The key points covered in the document are:
- Inventories must be measured at the lower of cost or net realizable value. Cost includes all costs to bring the inventory to its present location and condition.
- Common costing methods like FIFO and weighted average can be used if they approximate actual cost. Inventories should be written down if the net realizable value falls below cost.
- Disclosures around inventories, costing methods used, and write-downs to net realizable value are required.
The document discusses cost classification and cost sheets. It describes various bases for classifying costs, such as by nature, relation to cost centers, function, behavior, time, controllability, and normality. It also explains the components and advantages of a cost sheet, including determining total cost, profit/loss, and aiding in price fixation and budget preparation. Cost sheets classify costs to calculate prime cost, works cost, cost of production, cost of sales, and profit.
This document discusses inventory management systems. It begins by defining inventory and outlining the key purposes of holding inventory, such as maintaining independence of operations and meeting variations in product demand. It then describes different types of inventory like raw materials, work-in-progress, and finished goods. The document also discusses the various costs associated with inventory management, including ordering costs, carrying costs, and shortage costs. Finally, it examines how demand influences inventory and the trade-offs between using different inventory control logics for dependent versus independent demand.
The document discusses different types of costing methods used for specific industries, including job costing, batch costing, and contract costing. Job costing tracks costs for individual jobs or orders. Batch costing calculates total costs for batches of identical products. Contract costing treats each contract as a separate cost unit, tracking all direct and indirect costs associated with completing the contract. Overhead costs are typically a small percentage of total costs for contract work. Materials, labor, direct expenses, plant usage, and overhead costs are all tracked and allocated to the appropriate job, batch, or contract under each respective costing method.
The document discusses different inventory costing methods, including variable costing, absorption costing, and throughput costing. Variable costing expenses fixed manufacturing costs, while absorption costing includes fixed manufacturing costs as inventoriable costs. Throughput costing considers only direct materials and manufacturing labor as variable costs. Choosing different costing methods can impact reported operating income and incentives for inventory levels. Capacity measurement concepts like theoretical, practical, and normal capacity also impact costing and performance evaluation.
This document outlines accounting standards for inventory valuation. It discusses determining the cost of inventories, including costs of purchase, conversion, and other costs. It also addresses calculating inventory costs using specific identification, FIFO, or weighted average cost formulas. The standard requires inventories to be valued at the lower of cost or net realizable value.
The document discusses various aspects of classifying and defining costs. It defines direct costs as costs that can be traced to a specific cost object, like direct materials and direct labor. Indirect costs are costs that cannot be directly traced to a cost object, like manufacturing overheads. It provides examples of different types of direct and indirect costs such as direct materials, direct labor, indirect materials, and indirect labor. The document also discusses classifying costs by their nature into material, labor, and expenses costs. It defines various cost elements and cost centers.
The document provides information about cost sheets, including:
1) A cost sheet is a statement that shows the various components of the total cost of a product by classifying and analyzing costs. It helps ascertain costs, fix selling prices, and facilitate managerial decisions.
2) The components of total cost shown on a cost sheet include prime cost (direct materials, direct wages, direct expenses) and factory cost (prime cost plus factory overheads like indirect materials, wages, expenses).
3) Historical cost sheets are prepared based on actual incurred costs, while estimated cost sheets use forecasted costs and help set tender prices for jobs before production begins.
The document provides an introduction to cost accounting concepts including definitions of costing, cost accounting, and cost accountancy. It discusses the elements of cost including direct and indirect materials, direct and indirect labor, and direct and indirect expenses. It also defines key cost accounting terms like prime cost, factory cost, cost of production, and overhead. The document explains the treatment of various cost items and overhead and how they are classified and allocated.
* Total overheads = Rs. 1,20,000
* Total prime cost = Rs. 2.5 lacs = Rs. 25,00,000
* To allocate overheads proportionately based on prime cost
* Prime cost of Product A = Rs. 1,00,000
* Prime cost of Product B = Rs. 80,000
* Total prime cost = Rs. 1,00,000 + Rs. 80,000 = Rs. 1,80,000
* Overheads allocated to Product A = (Prime cost of A/Total prime cost) x Total overheads
= (Rs. 1,00,000/Rs. 1,80,000) x Rs. 1,20,
Introduction- Meaning and definition- Objectives, Importance and Uses of Cost Accounting, Difference between Cost Accounting and Financial Accounting; Various Elements of Cost and Classification of Cost; Cost object, Cost unit, Cost Centre; Cost reduction and Cost control. Limitations of Cost Accounting.
This document discusses the valuation and accounting of inventory. It defines inventory as assets held for sale, in production, or as supplies. Inventory should be valued at the lower of cost or net realizable value. Cost includes all purchase costs, conversion costs like direct labor and allocated overheads, and other costs to bring inventory to its present condition. Common costing methods are specific identification, FIFO, and weighted average. Disclosures include accounting policies and total inventory carrying amounts.
This document discusses project financing and financial analysis. It provides details on determining total investment costs, which include initial investment costs like land, buildings, equipment, and working capital. Production costs are also broken down, including factory costs, overhead, depreciation, and financing costs. Financial ratios are discussed to facilitate analysis, comparison of projects, and determine financial risk. The net present value and internal rate of return are introduced as metrics to evaluate project viability.
This document discusses project financing and feasibility analysis. It explains that a feasibility study helps determine if a proposed project will be financially viable by assessing if it can service debt obligations and provide expected returns. The study estimates total investment costs, production costs, and financial/economic viability by assembling components like land, construction, equipment, labor, and implementation costs. It also discusses calculating fixed costs, pre-production capital, working capital, and production costs with contingencies for price increases and unexpected events. The timing of expenditures and costs is important as it influences cash flow and return.
The document discusses various cost and managerial accounting concepts including:
1) The cost of a gift given to a friend is $0 as the original purchase price of the wine is not relevant, only the current market value of $75 matters.
2) Cost objects can be anything whose cost is being determined such as a product, process, location, or person. Direct costs are easily traceable to the cost object while indirect costs are shared among multiple cost objects.
3) Total costs are analyzed by elements including direct and indirect materials, direct and indirect labor, and overhead costs which include both direct and indirect expenses.
Direct materials used, direct labor cost, prepare statement of wip, prepare income statement. The document provides information on materials purchased and on hand at the beginning and end of the year, as well as direct labor hours worked and costs. It requests the calculation of direct materials used, direct labor cost, and the preparation of a statement of work in process and income statement.
The document discusses various ways that costs can be classified, including by nature (material, labor, expenses), function (production, selling, distribution, etc.), identifiability (direct, indirect), variability (fixed, variable, semi-variable, step), controllability, normality, and other classifications. It provides examples and definitions for each classification of costs.
UNIT - IV: COST CONCEPTS: Classification of costs - Direct and Indirect expenses- Cost
Sheet - Unit Costing - Job Costing - Mechanics & Application of Marginal Costing in terms of
cost control - Profit Planning - concept of CVP relationship; BEP and their applications.
This document provides an overview of cost estimation and costing. It defines estimation as calculating expected costs before production, while costing determines actual costs after production. The key stages of estimating procedure are discussed, including determining design, materials, labor, overhead costs, and profit. Objectives of estimating include establishing policies and prices. Factory overheads, administrative expenses, and selling expenses are also explained. Methods of costing and important elements of cost like materials, labor, and expenses are outlined.
This document provides an overview of basic cost concepts in cost accounting. It defines cost as the monetary measure of the amount of resources used for production. The three main elements of cost are materials, labor, and expenses. Materials can be direct or indirect, as can labor. Expenses can be direct or indirect as well. Overheads include indirect materials, labor, and expenses. Costs are also classified by their behavior (fixed, variable, semi-variable) and whether they are product or period costs. Direct costs can be traced to a cost object, while indirect costs cannot.
International Accounting Standard 2 (IAS 2) establishes the accounting treatment for inventories. The key points covered in the document are:
- Inventories must be measured at the lower of cost or net realizable value. Cost includes all costs to bring the inventory to its present location and condition.
- Common costing methods like FIFO and weighted average can be used if they approximate actual cost. Inventories should be written down if the net realizable value falls below cost.
- Disclosures around inventories, costing methods used, and write-downs to net realizable value are required.
The document discusses cost classification and cost sheets. It describes various bases for classifying costs, such as by nature, relation to cost centers, function, behavior, time, controllability, and normality. It also explains the components and advantages of a cost sheet, including determining total cost, profit/loss, and aiding in price fixation and budget preparation. Cost sheets classify costs to calculate prime cost, works cost, cost of production, cost of sales, and profit.
This document discusses inventory management systems. It begins by defining inventory and outlining the key purposes of holding inventory, such as maintaining independence of operations and meeting variations in product demand. It then describes different types of inventory like raw materials, work-in-progress, and finished goods. The document also discusses the various costs associated with inventory management, including ordering costs, carrying costs, and shortage costs. Finally, it examines how demand influences inventory and the trade-offs between using different inventory control logics for dependent versus independent demand.
The document discusses different types of costing methods used for specific industries, including job costing, batch costing, and contract costing. Job costing tracks costs for individual jobs or orders. Batch costing calculates total costs for batches of identical products. Contract costing treats each contract as a separate cost unit, tracking all direct and indirect costs associated with completing the contract. Overhead costs are typically a small percentage of total costs for contract work. Materials, labor, direct expenses, plant usage, and overhead costs are all tracked and allocated to the appropriate job, batch, or contract under each respective costing method.
The document discusses different inventory costing methods, including variable costing, absorption costing, and throughput costing. Variable costing expenses fixed manufacturing costs, while absorption costing includes fixed manufacturing costs as inventoriable costs. Throughput costing considers only direct materials and manufacturing labor as variable costs. Choosing different costing methods can impact reported operating income and incentives for inventory levels. Capacity measurement concepts like theoretical, practical, and normal capacity also impact costing and performance evaluation.
This document outlines accounting standards for inventory valuation. It discusses determining the cost of inventories, including costs of purchase, conversion, and other costs. It also addresses calculating inventory costs using specific identification, FIFO, or weighted average cost formulas. The standard requires inventories to be valued at the lower of cost or net realizable value.
The document discusses various aspects of classifying and defining costs. It defines direct costs as costs that can be traced to a specific cost object, like direct materials and direct labor. Indirect costs are costs that cannot be directly traced to a cost object, like manufacturing overheads. It provides examples of different types of direct and indirect costs such as direct materials, direct labor, indirect materials, and indirect labor. The document also discusses classifying costs by their nature into material, labor, and expenses costs. It defines various cost elements and cost centers.
The document provides information about cost sheets, including:
1) A cost sheet is a statement that shows the various components of the total cost of a product by classifying and analyzing costs. It helps ascertain costs, fix selling prices, and facilitate managerial decisions.
2) The components of total cost shown on a cost sheet include prime cost (direct materials, direct wages, direct expenses) and factory cost (prime cost plus factory overheads like indirect materials, wages, expenses).
3) Historical cost sheets are prepared based on actual incurred costs, while estimated cost sheets use forecasted costs and help set tender prices for jobs before production begins.
The document provides an introduction to cost accounting concepts including definitions of costing, cost accounting, and cost accountancy. It discusses the elements of cost including direct and indirect materials, direct and indirect labor, and direct and indirect expenses. It also defines key cost accounting terms like prime cost, factory cost, cost of production, and overhead. The document explains the treatment of various cost items and overhead and how they are classified and allocated.
* Total overheads = Rs. 1,20,000
* Total prime cost = Rs. 2.5 lacs = Rs. 25,00,000
* To allocate overheads proportionately based on prime cost
* Prime cost of Product A = Rs. 1,00,000
* Prime cost of Product B = Rs. 80,000
* Total prime cost = Rs. 1,00,000 + Rs. 80,000 = Rs. 1,80,000
* Overheads allocated to Product A = (Prime cost of A/Total prime cost) x Total overheads
= (Rs. 1,00,000/Rs. 1,80,000) x Rs. 1,20,
Introduction- Meaning and definition- Objectives, Importance and Uses of Cost Accounting, Difference between Cost Accounting and Financial Accounting; Various Elements of Cost and Classification of Cost; Cost object, Cost unit, Cost Centre; Cost reduction and Cost control. Limitations of Cost Accounting.
This document discusses the valuation and accounting of inventory. It defines inventory as assets held for sale, in production, or as supplies. Inventory should be valued at the lower of cost or net realizable value. Cost includes all purchase costs, conversion costs like direct labor and allocated overheads, and other costs to bring inventory to its present condition. Common costing methods are specific identification, FIFO, and weighted average. Disclosures include accounting policies and total inventory carrying amounts.
This document discusses project financing and financial analysis. It provides details on determining total investment costs, which include initial investment costs like land, buildings, equipment, and working capital. Production costs are also broken down, including factory costs, overhead, depreciation, and financing costs. Financial ratios are discussed to facilitate analysis, comparison of projects, and determine financial risk. The net present value and internal rate of return are introduced as metrics to evaluate project viability.
This document discusses project financing and feasibility analysis. It explains that a feasibility study helps determine if a proposed project will be financially viable by assessing if it can service debt obligations and provide expected returns. The study estimates total investment costs, production costs, and financial/economic viability by assembling components like land, construction, equipment, labor, and implementation costs. It also discusses calculating fixed costs, pre-production capital, working capital, and production costs with contingencies for price increases and unexpected events. The timing of expenditures and costs is important as it influences cash flow and return.
The document discusses various cost and managerial accounting concepts including:
1) The cost of a gift given to a friend is $0 as the original purchase price of the wine is not relevant, only the current market value of $75 matters.
2) Cost objects can be anything whose cost is being determined such as a product, process, location, or person. Direct costs are easily traceable to the cost object while indirect costs are shared among multiple cost objects.
3) Total costs are analyzed by elements including direct and indirect materials, direct and indirect labor, and overhead costs which include both direct and indirect expenses.
Direct materials used, direct labor cost, prepare statement of wip, prepare income statement. The document provides information on materials purchased and on hand at the beginning and end of the year, as well as direct labor hours worked and costs. It requests the calculation of direct materials used, direct labor cost, and the preparation of a statement of work in process and income statement.
The document discusses various ways that costs can be classified, including by nature (material, labor, expenses), function (production, selling, distribution, etc.), identifiability (direct, indirect), variability (fixed, variable, semi-variable, step), controllability, normality, and other classifications. It provides examples and definitions for each classification of costs.
UNIT - IV: COST CONCEPTS: Classification of costs - Direct and Indirect expenses- Cost
Sheet - Unit Costing - Job Costing - Mechanics & Application of Marginal Costing in terms of
cost control - Profit Planning - concept of CVP relationship; BEP and their applications.
This document provides an overview of cost estimation and costing. It defines estimation as calculating expected costs before production, while costing determines actual costs after production. The key stages of estimating procedure are discussed, including determining design, materials, labor, overhead costs, and profit. Objectives of estimating include establishing policies and prices. Factory overheads, administrative expenses, and selling expenses are also explained. Methods of costing and important elements of cost like materials, labor, and expenses are outlined.
This document provides an overview of basic cost concepts in cost accounting. It defines cost as the monetary measure of the amount of resources used for production. The three main elements of cost are materials, labor, and expenses. Materials can be direct or indirect, as can labor. Expenses can be direct or indirect as well. Overheads include indirect materials, labor, and expenses. Costs are also classified by their behavior (fixed, variable, semi-variable) and whether they are product or period costs. Direct costs can be traced to a cost object, while indirect costs cannot.
This document provides an overview of basic cost concepts in accounting. It defines cost as the monetary amount spent on production of goods or services. The key elements of cost are materials, labor, and expenses. Materials can be direct or indirect, as can labor. Expenses are either direct expenses that can be traced to a specific cost center, or indirect expenses which make up overhead costs. Overhead includes indirect materials, labor, and expenses and can be categorized as factory overhead, administrative overhead, or selling/distribution overhead. The document provides examples to illustrate each cost element and category.
This document provides an overview of basic cost concepts in accounting. It defines cost as the monetary amount spent on production of goods or services. The key elements of cost are materials, labor, and expenses. Materials can be direct or indirect, as can labor. Expenses are either direct expenses that can be traced to a specific cost center, or indirect expenses which make up overhead costs. Overhead includes indirect materials, labor, and expenses and can be categorized as factory overhead, administrative overhead, or selling/distribution overhead. The document provides examples to illustrate each cost element and category.
This document discusses cost estimation in manufacturing. It defines cost estimation as predicting production costs before manufacturing begins. The general cost estimation procedure involves estimating costs for design, materials, labor, tools/fixtures, overhead, etc. It provides details on estimating each of these cost elements and notes that accurate estimates require data from various departments on specifications, drawings, production rates, testing procedures, and more. The overall purpose of cost estimation is to help management decide whether to produce a product and what price to set.
This document discusses overhead absorption and absorption costing. It begins by defining overhead absorption as the amount of indirect costs assigned to cost objects. It then outlines the steps in overhead absorption, which include classifying indirect costs, aggregating costs into cost pools, determining allocation bases, and assigning overhead. The document contrasts absorption costing with variable costing and explains how absorption costing complies with GAAP by including fixed overhead costs in inventory valuation. It provides an example of calculating overhead absorption rates for a company. Big companies like Tesla also use overhead absorption to allocate indirect production costs. Under- or over-absorption of overhead can occur if actual overhead costs differ from estimated costs or output levels.
The overhead cost chapter in a business or accounting context typically deals with expenses that are incurred in the operation of a business but cannot be directly attributed to specific products or services.
Indian Accounting Standards AS2 - Valuation of InventoriesAkhilesh Krishnan
This document summarizes Ind AS-2 regarding the valuation of inventories. It defines inventories as assets held for sale, in production, or as supplies. Inventories are valued at the lower of cost or net realizable value. Cost includes purchase costs, conversion costs, and other costs to bring inventories to their present condition. Common costing methods are specific identification, FIFO, and weighted average. The valuation method used must approximate actual costs.
The document contains discussion questions and exercises about process costing. Process costing is used to determine the costs of products manufactured when the products are homogeneous. It involves determining material, labor, and overhead costs for each department and dividing total department costs by equivalent units to calculate a per unit cost. A cost of production report is used as a monthly summary of costs for each department and tracks quantities and costs of inputs, outputs and ending inventory.
The document discusses various cost accounting methods like standard costing, marginal costing, and absorption costing that are used to record, classify, and summarize costs to determine product or service costs. It also outlines different costing techniques like job costing, process costing, and contract costing. Finally, it defines the key elements of cost accounting like direct and indirect materials, direct and indirect labor, expenses, and overheads.
This document classifies costs in several ways:
1. By nature - material, labor, expenses
2. By function - production, selling, distribution, administrative
3. By identifiability - direct, indirect
4. By variability - fixed, variable, semi-variable, step
5. By controllability - controllable, uncontrollable
It also discusses other cost classifications such as product vs period costs, relevant vs irrelevant costs, normal vs abnormal costs, and more. The document provides definitions and examples for each cost classification.
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
Walmart Business+ and Spark Good for Nonprofits.pdfTechSoup
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
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Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
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A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
Main Java[All of the Base Concepts}.docxadhitya5119
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This slide is special for master students (MIBS & MIFB) in UUM. Also useful for readers who are interested in the topic of contemporary Islamic banking.
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This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
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Leveraging Generative AI to Drive Nonprofit Innovation
Icwaicas4
1. COST ACCOUNTING STANDARD ON
COST OF PRODUCTION FOR CAPTIVE CONSUMPTION
The following is the text of the COST ACCOUNTING STANDARD 4 (CAS-4) issued by the
Council of the Institute of Cost and Works Accountants of India on “Cost of Production for
Captive Consumption”. The standard deals with determination of cost of production for captive
consumption. In this Standard, the standard portions have been set in bold italic type. These
should be read in the context of the background material which has been set in normal type.
1. Introduction
The Cost Accounting principle for determination of cost of production is well established.
Similarly, rules for levy of excise duty on goods used for captive consumption are also well
defined. Captive Consumption means the consumption of goods manufactured by one division
and consumed by another division(s) of the same organization or related undertaking for
manufacturing another product(s). Liability of excise duty arises as soon as the goods covered
under excise duty are manufactured but excise duty is collected at the time of removal or
clearance from the place of manufacture even if such removal does not amount to sale.
Assessable value of goods used for captive consumption is based on cost of production.
According to the Central Excise Valuation (Determination of Price of Excisable Goods) Rules
2000, the assessable value of goods used for captive consumption is 115% (110% w.e.f. 05-08-
2003)of cost of production of such goods, and as may be prescribed by the Government from
time to time.
2. Objective
2.1 The purpose of this standard is to bring uniformity in the principles and methods used for
determining the cost of production of excisable goods used for captive consumption.
2.2 The cost statement prepared based on standard will be used for determination of assessable
value of excisable goods used for captive consumption.
2.3 The standard and its disclosure requirement will provide better transparency in the valuation
of excisable goods used for captive consumption.
3. Scope
3.1 The standard is to be followed for determining the cost of production to arrive at an
assessable value of excisable goods used for captive consumption.
3.2 Cost of production will include various cost components. They are already defined in Cost
Accounting Standard-1 (‘Classification of Cost’ – CAS-1). Thus, this standard has to be read in
conjunction with CAS-1.
2. 4. Definitions
4.1 Cost of Production : Cost of production shall consist of Material Consumed, Direct Wages
and Salaries, Direct Expenses, Works Overheads, Quality Control cost, Research and
Development Cost , Packing cost, Administrative Overheads relating to production.
To arrive at cost of production of goods dispatched for captive consumption, adjustment
for Stock of work-in-Process, finished goods, recoveries for sales of scrap, wastage etc
shall be made.
4.2 Captive Consumption : Captive Consumption means the consumption of goods
manufactured by one division or unit and consumed by another division or unit of the
same organization or related undertaking for manufacturing another product(s).
4.3 Normal Capacity is the production achieved or achievable on an average over a period or
season under normal circumstances taking into account the loss of capacity resulting from
planned maintenance. (CAS-2)
5. Determination of Cost of Production for Captive Consumption
To determine the cost of production for captive consumption, calculations of different cost
components and adjustments are explained below :
5.1 Material Consumed
Material Consumed shall include materials directly identified for production of goods
such as :
(a) indigenous materials
(b) imported materials
(c) bought out items
(d) self manufactured items
(e) process materials and other items
Cost of material consumed shall consist of cost of material, duties and taxes, freight
inwards, insurance, and other expenditure directly attributable to procurement. Trade
discount, rebates and other similar items will be deducted for determining the cost of
materials. Cenvat credit, credit for countervailing customs duty, Sales Tax set off, VAT,
duty draw back and other similar duties subsequently recovered/ recoverable by the
enterprise shall also be deducted.
5.2 Direct wages and salaries
Direct wages and salaries shall include house rent allowance, overtime and incentive
payments made to employees directly engaged in the manufacturing activities.
Direct wages and salaries include fringe benefits such as :
(i) Contribution to provident fund and ESIS
(ii) Bonus/ ex-gratia payment to employees
(iii) Provision for retirement benefits such as gratuity and superannuation
(iv) Medical benefits
(v) Subsidised food
(vi) Leave with pay and holiday payment
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3. (vii) Leave encashment
(viii) Other allowances such as children’s education allowance, conveyance allowance
which are payable to employees in the normal course of business etc.
5.3 Direct Expenses
Direct expenses are the expenses other than direct material cost and direct employees costs
which can be identified with the product.
Direct expenses include :
(i) Cost of utilities such as fuel, power, water, steam etc
(i) Royalty based on production
(ii) Technical Assistance / know –how fees
(iii) Amortized cost of moulds, patterns, patents etc
(iv) Job charges
(v) Hire charges for tools and equipment
(vi) Charges for a particular product designing etc.
5.4 Works Overheads
Works overheads are the indirect costs incurred in the production process.
Works overheads include the following expenses:
(i) Consumable stores and spares
(ii) Depreciation of plant and machinery, factory building etc
(iii) Lease rent of production assets
(iv) Repair and maintenance of plant and machinery, factory building etc
(v) Indirect employees cost connected with production activities
(vi) Drawing and Designing department cost.
(vii) Insurance of plant and machinery, factory building, stock of raw material & WIP etc
(viii) Amortized cost of jigs, fixtures, tooling etc
(ix) Service department cost such as Tool Room, Engineering & Maintenance, Pollution
Control etc
5.5 Quality Control Cost
The quality control cost is the expenses incurred relating to quality control activities for
adhering to quality standard. These expenses shall include salaries & wages relating to
employees engaged in quality control activity and other related expenses.
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4. 5.6 Research and Development Cost
The research and development cost incurred for development and improvement of the
process or the existing product shall be included in the cost of production.
5.7 Administrative Overheads
Administrative overheads needs to be analysed in relation to production activities and
other activities. Administrative overheads in relation to production activities shall be
included in the cost of production. Administrative overheads in relation to activities other
than manufacturing activities e.g. marketing, projects management, corporate office
expenses etc. shall be excluded from the cost of production.
5.8 Packing Cost
If product is transferred/dispatched duly packed for captive consumption, cost of such
packing shall be included.
Packing cost includes both cost of primary and secondary packing required for transfer/
dispatch of the goods used for captive consumption.
5.9 Absorption of overheads
Overheads shall be analysed into variable overheads and fixed overheads.
Variable Overheads are the items which change with the change in volume of production,
such as cost of utilities etc.
Fixed overheads are the items whose value do not change with the change in volume of
production such as salaries, rent etc.
The variable production overheads shall be absorbed in production cost based on actual
capacity utilisation.
The fixed production overheads and other similar item of fixed costs such as quality
control cost, research and development costs, administrative overheads relating to
manufacturing shall be absorbed in the production cost on the basis of the normal
capacity or actual capacity utilization of the plant, whichever is higher.
5.10 Valuation of Stock of work-in-progress and finished goods
Stock of work-in-progress shall be valued at cost on the basis of stages of completion as
per the cost accounting principles. Similarly, stock of finished goods shall be valued at
cost. Opening and closing stock of work-in-progress shall be adjusted for calculation of
cost of goods produced and similarly opening and closing stock of finished goods shall
be adjusted for calculation of goods despatched.
In case the cost of a shorter period is to be determined, where the figures of opening and
closing stock are not readily available, the adjustment of figures of opening and closing stock
may be ignored.
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5. 5.11 Treatment of Joint Products and By-Products
A production process may result in more than one product being produced simultaneously.
In case joint products are produced, joint costs are allocated between the products on a
rational and consistent basis. In case by-products are produced, the net realisable value of
by-products is credited to the cost of production of the main product.
For allocation of joint cost to joint products, the sales values of products at the split off point
i.e. when the products become separately identifiable may become the basis. Some other
basis may be adopted. For example, in case of petroleum products, each product is assigned
certain value based on its certain properties, may be calorific value and these values become
the basis of apportionment of joint cost among petroleum products.
5.12 Treatment of Scrap and Waste
The production process may generate scrap or waste. Realized or realizable value of scrap
or waste shall be credited to the cost of production.
In case, scrap or waste does not have ready market and it is used for reprocessing, the scrap
or waste value is taken at a rate of input cost depending upon the stage at which such scrap or
waste is recycled. The expenses incurred for making the scrap suitable for reprocessing shall
be deducted from value of scrap or waste.
Illustration
A production process has three stages.
Stage Input material cost Processing cost Total
( Rs/ MT) ( Rs/MT) ( Rs/MT)
1 2000 500 2500
2 2500 1000 3500
3 3500 1000 4500
If during the production process at stage3, the scrap is produced and the same is recycled at
stage2 after making an expenditure of Rs 200 per MT to make it suitable for re-processing
at stage2, then scrap will be valued @ Rs ( 2500 – 200 ) i.e Rs 2300. If no expenditure is
involved to make scrap re-usable, the scrap value will be @ Rs 2500. The scrap value for the
scrap produced during a period calculated at the rate as explained above may be deducted to
find out the cost of production for the period.
5.13 Miscellaneous Income
Miscellaneous income relating to production shall be adjusted in the calculation of cost
of production, for example, income from sale of empty containers used for despatch of
the captively consumed goods produced under reference.
5.14 Inputs received free of cost
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6. In case any input material, whether of direct or indirect nature, including packing
material is supplied free of cost by the user of the captive product, the landed cost of such
material shall be included in the cost of production.
5.15 Moulds, Tools, Dies & Patterns etc received free of cost
The amortization cost of such items shall be included in the cost of production.
5.16 Interest and financial charges
Interest and financial charges being a financial charge shall not be considered to be a
part of cost of production.
5.17 Abnormal and non-recurring cost
Abnormal and non-recurring cost arising due to unusual or unexpected occurrence of
events, such as heavy break down of plants, accident, market condition restricting sales
below normal level, abnormal idle capacity, abnormal process loss, abnormal scrap and
wastage, payments like VRS, retrenchment compensation, lay-off wages etc. The abnormal
cost shall not form the part of cost of production.
6. Cost Sheet
The cost sheet should be prepared in the format as par Appendix – 1 or as near thereto as
possible. The manufacturer will be required to maintain cost records and other books of
account in a manner, which would facilitate preparation and verification of the cost of
production. For manufacturers covered under the ambit of Section 209(1)(d) of the
Companies Act, 1956, i.e., where Cost Accounting Records are statutorily required to be
maintained, the Cost Accountant certifying the cost of production for captive consumption
shall verify the correctness of the cost from these records. However, for manufacturers not
covered under Section 209(1)(d) of the Companies Act, 1956, it is desirable that they also
maintain cost accounting records in line with the records so prescribed as to facilitate
determination and certification of cost of production.
7. Disclosure
(i) If there is any change in cost accounting principles and practices during the
concerned period which may materially affect the cost of production in terms of
comparability with previous periods, the same should be disclosed.
(ii) If opening stock and closing stock of work -in-progress and finished goods are not
readily available for certification purpose, the same should be disclosed.
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7. Appendix – 1
Name of the Manufacturer :
Address of the Manufacturer :
Registration No of Manufacturer :
Description of product captively consumed:
Excise Tariff Heading :
Statement of Cost of Production of _____________ manufactured / to be manufactured during the period _____________
Qty
Q1 Quantity Produced (Unit of Measure)
Q2 Quantity Despatched (Unit of Measure)
Particulars Total Cost Cost/unit
(Rs) ( Rs)
1. Material Consumed
2. Direct Wages and Salaries
3. Direct Expenses
4. Works Overheads
5. Quality Control Cost
6. Research & Development Cost
7. Administrative Overheads (relating to production activity)
8. Total (1 to 7)
9. Add : Opening stock of Work - in –Progress
10. Less : Closing stock of Work -in- Progress
11. Total (8+9-10)
12. Less : Credit for Recoveries/Scrap/By-Products / misc income
13. Packing cost
14. Cost of production ( 11 - 12 + 13)
15. Add: Inputs received free of cost
16. Add: Amortised cost of Moulds, Tools, Dies & Patterns etc received free of cost
17. Cost of Production for goods produced for captive consumption ( 14 + 15 + 16)
18. Add : Opening stock of finished goods
19. Less : Closing stock of finished goods
20. Cost of production for goods despatched ( 17 + 18 - 19)
Seal & Signature of Company's Authorised Representative
I/We, have verified above data on test check basis with reference to the books of account, cost accounting records and other records.
Based on the information and explanations given to me/us, and on the basis of generally accepted cost accounting principles and
practices followed by the industry, I /We certify that the above cost data reflect true and fair view of the cost of production.
Date : Seal & Signature of Cost Accountant
Place : Membership No.
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