This document provides an overview of cost accounting. It defines cost accounting and discusses its objectives, advantages, and disadvantages. It also covers key cost accounting concepts like cost centers, cost units, and classifications of costs based on identifiability, activity, control, time, and normality. Costs can be classified as direct or indirect, fixed or variable, controllable or non-controllable, historical or predetermined, and normal or abnormal for purposes of decision making. The document lays the foundation for understanding cost accounting principles and techniques.
The presentation covers the basics of Cost Accounting.
It gives a birds eye view of the subject of Cost Accounting.
The advantages, limitations, need, scope, classification are covered.
This document provides an introduction to cost accounting, including definitions and key concepts. It discusses the meaning of costing, cost accounting, and cost accountancy. It outlines the differences between costing and cost accounting. It also covers the evolution and development of cost accounting, objectives of cost accounting, advantages and limitations of cost accounting, and differences between financial and cost accounting. Finally, it discusses general principles of cost accounting and various types/techniques of costing such as historical costing, absorption costing, marginal costing, uniform costing, standard costing, and job costing. The document provides a high-level overview of cost accounting concepts and terminology in under 3 sentences.
The document provides information about key accounting concepts and terms. It defines accounting as the process of recording, summarizing, analyzing and reporting financial transactions. It discusses the importance of accounting in tracking income/expenditures, evaluating business performance, ensuring legal compliance, and improving decision making. It also describes the different types of accounting - financial accounting, cost accounting, and management accounting. Financial accounting involves preparing financial statements, cost accounting tracks costs related to production, and management accounting assists with planning, control and evaluation.
This document provides an introduction to cost and management accounting. It discusses key concepts such as cost accounting, management accounting, costing, and the differences between financial accounting and management accounting. The objectives of cost accounting are to ascertain costs, control costs, aid decision-making, determine selling prices, and more. Management accounting builds on cost and financial accounting data to provide information for planning, control, and decision-making. It focuses on the internal needs of management rather than external reporting.
COST ACCOUNTING Cost accounting is a process of collecting, recording, classifying, analyzing, summarizing, allocating and evaluating various alternative courses of action & control of costs.
Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability.
Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.
Definitions Cost accounting is the process of determining and accumulating the cost of product or activity.
It is defined as, 'the establishment of budgets, standard costs and actual costs of operations, processes, activities or products and the analysis of variances, profitability or the social use of funds.
Objectives of Cost AccountingTo control cost by using various techniques such as budgetary control, standard costing, and inventory control
To provide information for decision making and planning to formulate operative procedures
To help in directing and controlling operations
To ascertain costing profit
motivate to achieve the organization's goals
Scope of Cost Accounting Cost book-keeping
It involves maintaining complete record of all costs incurred from their incurrence to their charge to departments, products and services. Such recording is preferably done on the basis of double entry system.
Cost System
Proper accounting for costs requires systems and procedures.
Cost Ascertainment
Cost ascertainment forms the basis of managerial decision making for planning and control.
Cost Analysis
It involves the process of finding out the causal factors of actual costs varying from the budgeted costs and fixation of responsibility for cost increases.
Cost Comparisons
Cost accounting also includes comparisons between cost from alternative courses of action over a period of time.
Cost Control
Cost accounting is the utilization of cost information for exercising control. It involves a detailed examination of each cost in the light of benefit derived from the incurrence of the cost.
Cost Reports
The ultimate function of cost accounting is the presentation of reports. These reports are primarily for use by the management at different levels. Cost reports form the basis for planning and control, performance appraisal and managerial decision making.
Importance of Cost Accounting1. To Management
• Helps in ascertainment of cost of process, product, activity, by using different techniques such as job costing and process costing..
• Aids in price fixation by using demand and supply, activities of competitors, market condition to a great extent, also determine the price of product and cost to the producer does play an important role. The producer can take necessary help from costing records.
Helps in cost reduction by applying cost reduction pro gramme and improved methods are tried to reduce costs.
Elimination of wastage by checking the forms of waste, such as time and expenses et
Cost accounting involves determining the cost of products or services by classifying, recording, and allocating expenditures. It provides essential cost data to management for planning, operation, and decision making. The objectives of cost accounting are to analyze costs, determine unit costs, identify inefficiencies, provide profit/loss data, and guide pricing. While financial accounting focuses on measuring overall profitability, cost accounting aims to ascertain costs to help eliminate unprofitable products/services and maximize profits. Cost accounting is important for periods of competition, aiding price fixation, making estimates, improving production, eliminating waste, enabling comparisons, and providing data for profit/loss statements.
Accounting involves recording, classifying, summarizing, analyzing and communicating financial information. The key goals are to record financial transactions, report on financial performance and cash flows. Accounting helps track income/expenses, ensure compliance, improve decision making and evaluate business performance. The main accounting types are financial, cost, and management accounting. Financial accounting focuses on external reporting, cost accounting tracks costs, and management accounting assists internal decision making. Key financial statements include the profit and loss statement, balance sheet, and cash flow statement which provide important financial insights for stakeholders. Reconciliation and trial balances help ensure accuracy of accounting records.
The presentation covers the basics of Cost Accounting.
It gives a birds eye view of the subject of Cost Accounting.
The advantages, limitations, need, scope, classification are covered.
This document provides an introduction to cost accounting, including definitions and key concepts. It discusses the meaning of costing, cost accounting, and cost accountancy. It outlines the differences between costing and cost accounting. It also covers the evolution and development of cost accounting, objectives of cost accounting, advantages and limitations of cost accounting, and differences between financial and cost accounting. Finally, it discusses general principles of cost accounting and various types/techniques of costing such as historical costing, absorption costing, marginal costing, uniform costing, standard costing, and job costing. The document provides a high-level overview of cost accounting concepts and terminology in under 3 sentences.
The document provides information about key accounting concepts and terms. It defines accounting as the process of recording, summarizing, analyzing and reporting financial transactions. It discusses the importance of accounting in tracking income/expenditures, evaluating business performance, ensuring legal compliance, and improving decision making. It also describes the different types of accounting - financial accounting, cost accounting, and management accounting. Financial accounting involves preparing financial statements, cost accounting tracks costs related to production, and management accounting assists with planning, control and evaluation.
This document provides an introduction to cost and management accounting. It discusses key concepts such as cost accounting, management accounting, costing, and the differences between financial accounting and management accounting. The objectives of cost accounting are to ascertain costs, control costs, aid decision-making, determine selling prices, and more. Management accounting builds on cost and financial accounting data to provide information for planning, control, and decision-making. It focuses on the internal needs of management rather than external reporting.
COST ACCOUNTING Cost accounting is a process of collecting, recording, classifying, analyzing, summarizing, allocating and evaluating various alternative courses of action & control of costs.
Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability.
Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.
Definitions Cost accounting is the process of determining and accumulating the cost of product or activity.
It is defined as, 'the establishment of budgets, standard costs and actual costs of operations, processes, activities or products and the analysis of variances, profitability or the social use of funds.
Objectives of Cost AccountingTo control cost by using various techniques such as budgetary control, standard costing, and inventory control
To provide information for decision making and planning to formulate operative procedures
To help in directing and controlling operations
To ascertain costing profit
motivate to achieve the organization's goals
Scope of Cost Accounting Cost book-keeping
It involves maintaining complete record of all costs incurred from their incurrence to their charge to departments, products and services. Such recording is preferably done on the basis of double entry system.
Cost System
Proper accounting for costs requires systems and procedures.
Cost Ascertainment
Cost ascertainment forms the basis of managerial decision making for planning and control.
Cost Analysis
It involves the process of finding out the causal factors of actual costs varying from the budgeted costs and fixation of responsibility for cost increases.
Cost Comparisons
Cost accounting also includes comparisons between cost from alternative courses of action over a period of time.
Cost Control
Cost accounting is the utilization of cost information for exercising control. It involves a detailed examination of each cost in the light of benefit derived from the incurrence of the cost.
Cost Reports
The ultimate function of cost accounting is the presentation of reports. These reports are primarily for use by the management at different levels. Cost reports form the basis for planning and control, performance appraisal and managerial decision making.
Importance of Cost Accounting1. To Management
• Helps in ascertainment of cost of process, product, activity, by using different techniques such as job costing and process costing..
• Aids in price fixation by using demand and supply, activities of competitors, market condition to a great extent, also determine the price of product and cost to the producer does play an important role. The producer can take necessary help from costing records.
Helps in cost reduction by applying cost reduction pro gramme and improved methods are tried to reduce costs.
Elimination of wastage by checking the forms of waste, such as time and expenses et
Cost accounting involves determining the cost of products or services by classifying, recording, and allocating expenditures. It provides essential cost data to management for planning, operation, and decision making. The objectives of cost accounting are to analyze costs, determine unit costs, identify inefficiencies, provide profit/loss data, and guide pricing. While financial accounting focuses on measuring overall profitability, cost accounting aims to ascertain costs to help eliminate unprofitable products/services and maximize profits. Cost accounting is important for periods of competition, aiding price fixation, making estimates, improving production, eliminating waste, enabling comparisons, and providing data for profit/loss statements.
Accounting involves recording, classifying, summarizing, analyzing and communicating financial information. The key goals are to record financial transactions, report on financial performance and cash flows. Accounting helps track income/expenses, ensure compliance, improve decision making and evaluate business performance. The main accounting types are financial, cost, and management accounting. Financial accounting focuses on external reporting, cost accounting tracks costs, and management accounting assists internal decision making. Key financial statements include the profit and loss statement, balance sheet, and cash flow statement which provide important financial insights for stakeholders. Reconciliation and trial balances help ensure accuracy of accounting records.
1.This PPT covers Definition of CCost Acccountng, . Scope of cost accounting, Advantages, Limitations of cost accounting, differences between Financial Accounting and Cost Accounting.
- Accounting is the recording, classifying, summarizing and reporting of financial transactions. It has both historical and managerial functions.
- The accrual basis of accounting recognizes revenue and expenses when earned or incurred, regardless of cash receipt or payment. The double entry system records each transaction with both a debit and credit entry.
- Modern accounting uses double entry, computers, and electronic media. It allows for accurate, fast accounting but errors can be difficult to identify if the accounting system fails.
Cost accounting is the process of collecting, assigning, and evaluating costs to products and services to understand where a company earns and loses money. It provides input for managerial decision making regarding future profits. Cost accounting objectives include determining selling prices, controlling costs, providing information for decisions, ascertaining costing profit, and facilitating financial statements preparation. It is important for management to determine product costs, facilitate planning and control, eliminate waste, provide estimates and identify unprofitable activities. Cost accounting also benefits employees through incentive plans.
“Cost accounting is Accounting for costs classifiction and analysis of expenditure as will enable the total cost of any particular unit of production to be ascertained with reasonable degree of accuracy and at the same time to disclose exactly how much total cost is constituted
This document provides an introduction to strategic management accounting. It discusses cost accounting, management accounting, and financial accounting. Specifically, it defines cost accounting and discusses its objectives of ascertaining, controlling, and reducing costs. It also defines management accounting and explains that it aids planning, organizing, and decision-making. Finally, it discusses the differences between cost accounting, management accounting, and financial accounting.
This document provides an introduction to cost accounting. It defines cost accounting, cost accountancy, and costing, and distinguishes between cost accounting and financial accounting. Cost accounting provides internal management with cost information to aid planning, control, and decision making, while financial accounting provides external parties with financial statements. The objectives of cost accounting are to determine product costs, facilitate business planning and control, and supply information for decisions. Management needs cost information for pricing, product mix, and profit-volume decisions. The role of the cost accountant is to analyze costs, reconcile production to accounting, assist in new product development, identify cost improvements, and prepare cost analyses.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
Accounting is a system for measuring and recording business transactions and reporting financial information. It involves processing transactions, preparing financial statements, and providing information to decision-makers. The key points are:
- Accounting records business transactions, prepares financial reports like the income statement and balance sheet, and provides information to managers, investors, and others.
- Accounting principles and conventions provide guidelines for financial reporting and include concepts like business entity, cost, matching, and consistency to ensure uniformity and comparability.
- Management accounting provides internal reports for decision-making while financial accounting prepares external financial statements for stakeholders.
The document discusses cost accounting concepts including:
- Cost accounting provides reliable and timely cost information to management to control costs, reduce costs, improve productivity and make crucial decisions.
- Costs are classified as direct or indirect, fixed or variable, and by element (material, labor, expenses). This classification enables better cost analysis.
- Cost accounting objectives include price fixation, cost control, decision making, and measuring performance. It provides comprehensive cost information compared to financial accounting.
The document discusses cost accounting and its evolution from a technique for ascertaining product costs to a technique for cost control and reduction. It defines cost accounting as recording, classifying, and summarizing costs to determine product costs, plan and control costs, and provide information for management decision making. Cost accounting is distinguished from financial accounting in that it focuses on internal cost analysis for management purposes, uses estimated data, and classifies costs as fixed and variable.
Chapter 1 Introduction to Accounting and Accounting Systems Part - ISuku Thomas Samuel
The document provides an introduction to accounting and accounting systems, defining key terms like transactions, assets, liabilities, revenues, and expenses. It explains the accounting process of recording, classifying, and summarizing transactions and the basic accounting equation that total assets equal total liabilities plus owner's equity. It also outlines the different types of accounts in accounting - personal, real, and nominal accounts - and the golden rules for debit and credit entries.
This document provides an introduction to cost accounting. It defines cost accounting as the recording and presentation of business transactions related to production for measurement and control purposes. Cost accounting differs from financial accounting in that it focuses on internal transactions and provides information to management for decision making. The objectives of cost accounting include controlling and reducing costs, determining selling prices, assisting management with decisions, and ensuring profit from each business activity.
Introduction of costing , its elements & cost sheetKamlesh Shinde
Basically presentation is based on the costing , its various elements, their classification and the illustration on a simple cost sheet and Estimated Cost sheet. It is very useful to beginners in cost accounting , B.Com and M.com Students.
Cost accounting involves recording, classifying, and summarizing costs to determine the costs of products, services, or activities. It provides information to management for decision making, cost control, and reducing costs. Cost accounting determines unit costs by categorizing costs as direct materials, direct labor, and expenses. It helps identify profitable and unprofitable activities. Financial accounting only provides overall performance and is historical in nature, while cost accounting provides more detailed cost information and analysis to management.
Cost Accounting Study material - Unit I.docxDrSJayashree
Cost accounting provides detailed cost information to aid management in controlling operations and planning for the future. It helps optimize business practices through cost efficiency and enables management to identify areas for cost reduction. Cost accounting classifies and analyzes expenses to determine the cost per unit of a product or service. This allows management to set prices, maximize profits, and make informed decisions regarding production, sales, budgets, and future expansion. Financial accounting only provides aggregate profit and loss data, whereas cost accounting reveals sources of inefficiency and waste.
Cost accounting involves classifying, recording, and allocating expenditures to determine the costs of products or services. It provides data to management for control and guidance. Cost accounting ascertains the cost of every order, job, contract, process, service, or unit. It deals with product costs as well as selling, distribution, and other costs. The goal is to determine total costs with reasonable accuracy and show how costs are constituted to control and reduce them.
Cost accounting involves recording, classifying, and summarizing costs to determine product or service costs. It assists management with decision making through cost analysis, determination, and reporting. The document outlines key cost accounting concepts like cost sheet elements, inventory control techniques like ABC analysis, and cost accounting objectives of planning, controlling, and reducing costs. It also discusses the differences between cost, financial, and management accounting and covers cost accounting principles.
This document provides an introduction to cost accounting concepts. It defines cost accounting and differentiates it from financial accounting. Cost accounting aims to ascertain costs to help with planning, control, and decision making, while financial accounting satisfies external reporting requirements. The document outlines key cost accounting concepts like cost units, cost centers, classifying costs by nature, function, behavior, controllability, and normality. It provides examples of cost statements that bring together different cost elements.
This document provides information on cost accounting, cost-effectiveness analysis, and auditing in nursing. It defines cost accounting as collecting, recording, and analyzing costs to help management with decision making. Cost-effectiveness analysis compares the costs and outcomes of different programs or interventions. The key steps in a cost-effectiveness analysis are identifying alternatives, determining costs and outcomes, and comparing cost-outcome ratios. Auditing ensures adequate cost accounting information for nurses to perform administrative and managerial roles effectively.
Cost accounting involves recording, analyzing, and reporting costs of products to help management with decision making. It determines fixed and variable elements of costs. Cost accounting facilitates cost control, profitability analysis, and price determination. It differs from financial accounting in its focus on internal reporting, use of pre-determined costs, and frequent reporting to management for purposes like cost reduction.
This document contains 26 questions about various topics related to business analytics. The questions cover definitions of key terms like analytics, data center, MIS, outlier, and machine learning. They also ask about tracing the evolution of business analytics, examining the components and relationship to business strategy. Additional questions cover descriptive and diagnostic analytics, plotting line graphs of sales data, schema, marketing analytics, structured vs unstructured data, applications of analytics, and components of data warehousing.
This document contains 13 financial management questions related to calculating future and present values using different interest rates, as well as questions about calculating the cost of equity, cost of debt, and weighted average cost of capital for companies. Specifically, it asks about calculating future values with annual interest rates ranging from 6-12%, present values over time periods of 3-8 years, the cost of equity using the dividend yield method and CAPM, and the cost of debt and preference shares issued at par, premiums, and discounts.
1.This PPT covers Definition of CCost Acccountng, . Scope of cost accounting, Advantages, Limitations of cost accounting, differences between Financial Accounting and Cost Accounting.
- Accounting is the recording, classifying, summarizing and reporting of financial transactions. It has both historical and managerial functions.
- The accrual basis of accounting recognizes revenue and expenses when earned or incurred, regardless of cash receipt or payment. The double entry system records each transaction with both a debit and credit entry.
- Modern accounting uses double entry, computers, and electronic media. It allows for accurate, fast accounting but errors can be difficult to identify if the accounting system fails.
Cost accounting is the process of collecting, assigning, and evaluating costs to products and services to understand where a company earns and loses money. It provides input for managerial decision making regarding future profits. Cost accounting objectives include determining selling prices, controlling costs, providing information for decisions, ascertaining costing profit, and facilitating financial statements preparation. It is important for management to determine product costs, facilitate planning and control, eliminate waste, provide estimates and identify unprofitable activities. Cost accounting also benefits employees through incentive plans.
“Cost accounting is Accounting for costs classifiction and analysis of expenditure as will enable the total cost of any particular unit of production to be ascertained with reasonable degree of accuracy and at the same time to disclose exactly how much total cost is constituted
This document provides an introduction to strategic management accounting. It discusses cost accounting, management accounting, and financial accounting. Specifically, it defines cost accounting and discusses its objectives of ascertaining, controlling, and reducing costs. It also defines management accounting and explains that it aids planning, organizing, and decision-making. Finally, it discusses the differences between cost accounting, management accounting, and financial accounting.
This document provides an introduction to cost accounting. It defines cost accounting, cost accountancy, and costing, and distinguishes between cost accounting and financial accounting. Cost accounting provides internal management with cost information to aid planning, control, and decision making, while financial accounting provides external parties with financial statements. The objectives of cost accounting are to determine product costs, facilitate business planning and control, and supply information for decisions. Management needs cost information for pricing, product mix, and profit-volume decisions. The role of the cost accountant is to analyze costs, reconcile production to accounting, assist in new product development, identify cost improvements, and prepare cost analyses.
1.1 identify the type of accounting
1.2 difference between Cost Accounting , Cost Accountancy and Costing
1.3 understand the Management information needs
1.4 identify the objectives of cost accounting
1.5 difference between Cost Accounting Vs. Financial Accounting
1.6 identify the role of cost accountant
Accounting is a system for measuring and recording business transactions and reporting financial information. It involves processing transactions, preparing financial statements, and providing information to decision-makers. The key points are:
- Accounting records business transactions, prepares financial reports like the income statement and balance sheet, and provides information to managers, investors, and others.
- Accounting principles and conventions provide guidelines for financial reporting and include concepts like business entity, cost, matching, and consistency to ensure uniformity and comparability.
- Management accounting provides internal reports for decision-making while financial accounting prepares external financial statements for stakeholders.
The document discusses cost accounting concepts including:
- Cost accounting provides reliable and timely cost information to management to control costs, reduce costs, improve productivity and make crucial decisions.
- Costs are classified as direct or indirect, fixed or variable, and by element (material, labor, expenses). This classification enables better cost analysis.
- Cost accounting objectives include price fixation, cost control, decision making, and measuring performance. It provides comprehensive cost information compared to financial accounting.
The document discusses cost accounting and its evolution from a technique for ascertaining product costs to a technique for cost control and reduction. It defines cost accounting as recording, classifying, and summarizing costs to determine product costs, plan and control costs, and provide information for management decision making. Cost accounting is distinguished from financial accounting in that it focuses on internal cost analysis for management purposes, uses estimated data, and classifies costs as fixed and variable.
Chapter 1 Introduction to Accounting and Accounting Systems Part - ISuku Thomas Samuel
The document provides an introduction to accounting and accounting systems, defining key terms like transactions, assets, liabilities, revenues, and expenses. It explains the accounting process of recording, classifying, and summarizing transactions and the basic accounting equation that total assets equal total liabilities plus owner's equity. It also outlines the different types of accounts in accounting - personal, real, and nominal accounts - and the golden rules for debit and credit entries.
This document provides an introduction to cost accounting. It defines cost accounting as the recording and presentation of business transactions related to production for measurement and control purposes. Cost accounting differs from financial accounting in that it focuses on internal transactions and provides information to management for decision making. The objectives of cost accounting include controlling and reducing costs, determining selling prices, assisting management with decisions, and ensuring profit from each business activity.
Introduction of costing , its elements & cost sheetKamlesh Shinde
Basically presentation is based on the costing , its various elements, their classification and the illustration on a simple cost sheet and Estimated Cost sheet. It is very useful to beginners in cost accounting , B.Com and M.com Students.
Cost accounting involves recording, classifying, and summarizing costs to determine the costs of products, services, or activities. It provides information to management for decision making, cost control, and reducing costs. Cost accounting determines unit costs by categorizing costs as direct materials, direct labor, and expenses. It helps identify profitable and unprofitable activities. Financial accounting only provides overall performance and is historical in nature, while cost accounting provides more detailed cost information and analysis to management.
Cost Accounting Study material - Unit I.docxDrSJayashree
Cost accounting provides detailed cost information to aid management in controlling operations and planning for the future. It helps optimize business practices through cost efficiency and enables management to identify areas for cost reduction. Cost accounting classifies and analyzes expenses to determine the cost per unit of a product or service. This allows management to set prices, maximize profits, and make informed decisions regarding production, sales, budgets, and future expansion. Financial accounting only provides aggregate profit and loss data, whereas cost accounting reveals sources of inefficiency and waste.
Cost accounting involves classifying, recording, and allocating expenditures to determine the costs of products or services. It provides data to management for control and guidance. Cost accounting ascertains the cost of every order, job, contract, process, service, or unit. It deals with product costs as well as selling, distribution, and other costs. The goal is to determine total costs with reasonable accuracy and show how costs are constituted to control and reduce them.
Cost accounting involves recording, classifying, and summarizing costs to determine product or service costs. It assists management with decision making through cost analysis, determination, and reporting. The document outlines key cost accounting concepts like cost sheet elements, inventory control techniques like ABC analysis, and cost accounting objectives of planning, controlling, and reducing costs. It also discusses the differences between cost, financial, and management accounting and covers cost accounting principles.
This document provides an introduction to cost accounting concepts. It defines cost accounting and differentiates it from financial accounting. Cost accounting aims to ascertain costs to help with planning, control, and decision making, while financial accounting satisfies external reporting requirements. The document outlines key cost accounting concepts like cost units, cost centers, classifying costs by nature, function, behavior, controllability, and normality. It provides examples of cost statements that bring together different cost elements.
This document provides information on cost accounting, cost-effectiveness analysis, and auditing in nursing. It defines cost accounting as collecting, recording, and analyzing costs to help management with decision making. Cost-effectiveness analysis compares the costs and outcomes of different programs or interventions. The key steps in a cost-effectiveness analysis are identifying alternatives, determining costs and outcomes, and comparing cost-outcome ratios. Auditing ensures adequate cost accounting information for nurses to perform administrative and managerial roles effectively.
Cost accounting involves recording, analyzing, and reporting costs of products to help management with decision making. It determines fixed and variable elements of costs. Cost accounting facilitates cost control, profitability analysis, and price determination. It differs from financial accounting in its focus on internal reporting, use of pre-determined costs, and frequent reporting to management for purposes like cost reduction.
Similar to Nature & Scope of Cost Accounting.pptx (20)
This document contains 26 questions about various topics related to business analytics. The questions cover definitions of key terms like analytics, data center, MIS, outlier, and machine learning. They also ask about tracing the evolution of business analytics, examining the components and relationship to business strategy. Additional questions cover descriptive and diagnostic analytics, plotting line graphs of sales data, schema, marketing analytics, structured vs unstructured data, applications of analytics, and components of data warehousing.
This document contains 13 financial management questions related to calculating future and present values using different interest rates, as well as questions about calculating the cost of equity, cost of debt, and weighted average cost of capital for companies. Specifically, it asks about calculating future values with annual interest rates ranging from 6-12%, present values over time periods of 3-8 years, the cost of equity using the dividend yield method and CAPM, and the cost of debt and preference shares issued at par, premiums, and discounts.
This document provides an overview of business analytics. It begins with defining key terms like data, databases, and the DIKW pyramid. It then discusses what business analytics is, the steps involved, and examples of its history. Different types of business analytics models are described, as well as the components and benefits. Various analysis tools like MOST and PESTLE are explained. Finally, emerging trends in business analytics are highlighted.
This document discusses risk management and control. It defines risk management as understanding and managing risks to achieve corporate objectives. It then describes the TARA framework for assessing and managing risks through transference, avoidance, reduction, and acceptance. The document also discusses business risks like strategic, product, commodity price, operational, and reputation risks. It covers the public interest accountants have and stakeholders they are accountable to. The document defines information systems and how they can be implemented as part of risk strategy with initial and running costs. It describes characteristics and benefits of big data like faster decision making and competitive advantage, as well as risks involving skills, security, and protection.
Here are the solutions to the numerical problems:
i) BEP in units = Total Fixed Cost / Contribution per unit
= Rs. 1,50,000 / (Rs. 15 - Rs. 10)
= 1,50,000/Rs. 5
= 30,000 units
ii) BEP in amount = Total Fixed Cost / P/V Ratio
= Rs. 1,50,000 / (Rs. 15 - Rs. 10)/Rs. 15
= 1,50,000/Rs. 5/Rs. 15
= Rs. 1,50,000
iii) P/V Ratio = Contribution/Sales
= (Selling Price - Variable Cost)/Selling
Cost Accounting Material & Labour cost control - Part ISuku Thomas Samuel
The document provides information on material and labor cost control techniques. It defines material and material control, and discusses objectives of material control like economy of purchase, maintaining appropriate stock levels, and minimizing wastage. Techniques discussed include ABC analysis, VED analysis, setting minimum, maximum and reorder levels, economic order quantity, and different methods of issuing material from stores like FIFO, LIFO, average cost. Store ledger accounts are maintained to systematically record receipts and issues of materials. Questions at the end provide transactions to prepare store ledger accounts using LIFO and FIFO methods.
This document provides an overview of working capital management and dividend decisions. It defines working capital as the capital used in a business's day-to-day operations, calculated as current assets minus current liabilities. An optimal level of working capital is needed to sustain business activity while avoiding excess or inadequate levels. Dividends are portions of profit distributed to shareholders and can take several forms including cash, stock, scrip, and property dividends. A company's dividend policy considers factors like availability of funds, financial needs, investment opportunities, and shareholder requirements. Dividend theories include the wealth maximization and long-term finance perspectives as well as the relevance and non-relevance theories.
Here are the key steps to solve this problem using EBIT-EPS approach:
1. Calculate EBIT for the existing business (given as Rs. 30,000)
2. For each financing option, calculate:
- Interest expense
- Tax expense
- Earnings available to equity shareholders
- EPS
3. Compare EPS under each option and select the option with highest EPS
4. Detailed calculations for each option need to be shown to arrive at the optimal capital structure
The optimal financing option can be determined by comparing EPS under each alternative. The option with highest EPS would be preferred.
The document discusses various investment decision concepts including investment, risk and return, capital budgeting techniques, and types of capital expenditures (capex). It provides examples of each type of capex - expansion, diversification, modernization, research & development, and miscellaneous. The capital budgeting techniques discussed include payback period, accounting rate of return, net present value, internal rate of return, and profitability index. Examples are provided to illustrate how to use the payback period technique to evaluate investment opportunities.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Best practices for project execution and deliveryCLIVE MINCHIN
A select set of project management best practices to keep your project on-track, on-cost and aligned to scope. Many firms have don't have the necessary skills, diligence, methods and oversight of their projects; this leads to slippage, higher costs and longer timeframes. Often firms have a history of projects that simply failed to move the needle. These best practices will help your firm avoid these pitfalls but they require fortitude to apply.
Discover timeless style with the 2022 Vintage Roman Numerals Men's Ring. Crafted from premium stainless steel, this 6mm wide ring embodies elegance and durability. Perfect as a gift, it seamlessly blends classic Roman numeral detailing with modern sophistication, making it an ideal accessory for any occasion.
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Navigating the world of forex trading can be challenging, especially for beginners. To help you make an informed decision, we have comprehensively compared the best forex brokers in India for 2024. This article, reviewed by Top Forex Brokers Review, will cover featured award winners, the best forex brokers, featured offers, the best copy trading platforms, the best forex brokers for beginners, the best MetaTrader brokers, and recently updated reviews. We will focus on FP Markets, Black Bull, EightCap, IC Markets, and Octa.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Industrial Tech SW: Category Renewal and CreationChristian Dahlen
Every industrial revolution has created a new set of categories and a new set of players.
Multiple new technologies have emerged, but Samsara and C3.ai are only two companies which have gone public so far.
Manufacturing startups constitute the largest pipeline share of unicorns and IPO candidates in the SF Bay Area, and software startups dominate in Germany.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
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At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
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The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
Building Your Employer Brand with Social MediaLuanWise
Presented at The Global HR Summit, 6th June 2024
In this keynote, Luan Wise will provide invaluable insights to elevate your employer brand on social media platforms including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok. You'll learn how compelling content can authentically showcase your company culture, values, and employee experiences to support your talent acquisition and retention objectives. Additionally, you'll understand the power of employee advocacy to amplify reach and engagement – helping to position your organization as an employer of choice in today's competitive talent landscape.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
3. HISTORY OF ACCOUNTING
• Origin traced to ancient civilizations.
• Audit systems introduced Egyptians and Babylonians.
• Roman Empire streamlined accounting practices to generate
financial information.
• Bookkeeping practice evolved in medieval Europe.
• Introduction of double-entry bookkeeping.
• Luca Pacioli work Summa de arithmetica, geometria (Venice 1494)
is the foundation for modern accounting.
• Institute of Accountants in Glasgow petitioned Queen Victoria for a
Royal Charter in July 1854.
• United States the American Institute of Certified Public
Accountants was established in 1887
4. DEFINITION OF ACCOUNTING
Accounting is defined as "the art and the science of
recording, classifying and summarising transactions in a
business".
• Accounting can be considered as an art because it requires creative
judgment and skills. In order to perform accounting functions well,
discipline and training is required.
• Accounting can be considered as a science follows a systematic
and organized path to understanding. It has well defined laws and
principles.
6. OBJECTIVES OF ACCOUNTING
Maintenance of
Records
• Maintain systematic record of all financial
transactions.
• Preparation of final accounts.
Estimation of
Profit or Loss
• Comparison of incomes of a business with its
expenses.
• Helps a business to evaluate its profit position.
Determination of
Financial Position
• Estimate the assets and liabilities of the firm.
7. ACCOUNTING EQUATION
Assets
• Economic resources of an enterprise.
• Used by the business in its operations.
• Classified into two types: current and fixed.
Liabilities
• Obligations or debts that an enterprise.
• Should be paid in the future.
• Classified as current and long term.
Capital
• Amount invested by the owner in the firm.
• Must be paid while winding up.
10. TYPES OF ACCOUNTS
According to the double entry system of bookkeeping, there are three types of
accounts:
Personal Accounts
Accounts that represent and contain transactions related to individuals or other
organizations.
E.g. Thomas Account
Real Accounts
Accounts which represent and contain transactions related to the assets of the
business.
E.g. Furniture Account.
Nominal Accounts
11. GOLDEN RULES OF ACCOUNTING
Types of Account Golden Rules
Personal Account Debit the receiver; credit the giver.
Real Account Debit what comes in; credit what goes out.
Nominal Account
Debit all expenses and losses; credit all incomes and
gains.
12. TEST YOUR UNDERSTANDING
1. Amazon account
2. Land account
3. Interest paid account
4. Joseph account
5. Drawings account
6. Accountant account
7. Repair account
8. Depreciation account
9. Capital account
10.Wages account
11.Machinery account
12.Commission account
13.Loan account
14.Salary account
15.Mathew account
14. COST - MEANING
• Dictionary meaning – price paid for something
• Amount of resources given up in exchange for any goods or service
• “Cost is the amount of expenditure incurred or attributable to a given
thing”
- CIMA, UK
• “Cost is a measurement, in monetary terms, of the amount of resources
used for the purpose of production of goods or rendering services”
- ICWA, India
15. COST VS. EXPENSE VS. LOSS
COST EXPENSE LOSS
Amount or equivalent paid or
charged for something
Cost used up in earning
revenues
Excess of expenditure incurred
over revenue earned
Used in present continuous
context.
Used in past context. Used in past context.
Possibility to recoup. Recouped. No possibility to recoup and
expired.
17. COSTING & COST ACCOUNTING
COSTING
• Determination of cost.
• Executed with the use of simple techniques – arithmetic process,
memorandum statement etc.
COST ACCOUNTING
• Reference to the subject as a whole
• Comprises of the concepts, principles, methodologies, practices, formats,
statements etc.
18. COST ACCOUNTING
“The application of costing and cost accounting principles, methods and
techniques to science, art and practice of cost control and the
ascertainment of profitability”
- CIMA, UK
“Cost accounting is the application of accounting and costing principles,
methods and techniques in the ascertainment of costs and the analysis of
saving/or excess cost incurred as compared with previous experience or
with standards”.
- H.J. Wheldon
• Formal accounting mechanism by which the cost are identified.
• Include principles, conventions, techniques and systems.
• Helps to plan and control utilization of resources.
19. ADVANTAGES OF COST ACCOUNTING
1. Ascertainment of cost: Cost information is the basis for
determination of the price of product or service.
2. Cost control: Scientific judgment of the cost helps to have an
effective control over the expenses to be incurred by a business.
3. Cost reduction: Reduction of cost refers to permanent reduction
in the cost without compromising on the quality.
4. Assisting management: Decision making is a very important
process for the top-level management and its activities.
20. DISADVANTAGES OF COST ACCOUNTING
1. Lack of uniform procedures: Cost accounting lacks uniform
practices and processes and unified processes and practices.
2. Varies from industry to industry: Practices of cost accounting vary
from industry to industry.
3. Cost accounting practices are costly: Implementation of process,
procedures and methods are cost accounting is a costly affair for
the business.
4. Too many concepts and conventions: Has too many concepts and
conventions.
5. Data centric subject: Depends on the information.
21. COST CENTRE
“A production or service, function, activity or item of equipment whose
costs may be attributed to cost units. A cost center is the smallest
organizational sub-unit for which separate cost allocation is
attempted.”
- CIMA, UK
• Smallest segment of an organization/ department.
• Used for collection of cost.
• Improves reporting of cost.
• Helps in easier monitoring of cost.
• Increases accountability.
22. COST CENTRE
Two types of cost centers:
1. Production Cost Centers
• Cost centres directly involved in the manufacturing operations.
2. Service Cost Centers
• Service cost centres are incidental to the production process.
• Do not produce products directly.
• Any cost which is incurred or charged to service cost centres must
be reapportioned to production cost centres.
23. COST UNIT
• Refers to the unit of quantity of
product, service or time (or
combination of these) in relation to
which costs may be ascertained or
expressed.
• Refers to the final products
manufactured by the organization.
• The unit of output (or a unit of
service provided) which absorbs the
cost center’s overhead cost.
Product / Service Cost Unit
Shoes Pair
Cotton Bale
Steel Tonne
Crude oil Barrel
Hotel Room rent / day
Carpet Square foot
24. CLASSIFICATION BASED ON INDENTIFIABILITY
Based on traceability to the cost center/ process/ work job/ cost unit,
cost can be classified as DIRECT and INDIRECT COST.
• Direct cost is directly related to a cost unit/ process or
department. It is convenient to identify and specific to the
manufacturing or production process.
• Indirect Cost is incurred for the benefit of direct cost process /
departments. It cannot be traced or identified directly and benefits
several departments/ processes.
25. CLASSIFICATION BASED ON ACTIVITY
Based on changes in level of activity or volume of production cost
can be classified as FIXED COST, VARIABLE COST and SEMI VARIABLE
COST.
• Fixed Cost is the total cost remains the same irrespective of level
of production. For fixed cost, cost / unit reduces with increase in
level of output.
• Variable Cost is the cost that varies with the level of activity. For
variable Cost / unit remains the same, total cost will change with
output.
• Semi variable Cost is the cost includes both fixed and variable
26. CLASSIFICATION BASED ON CONTROL
Based on regulation of the cost, cost can be classified as
Controllable and Non-controllable Cost.
• Controllable Cost is cost that can be regulated by the
management authority.
• Non-controllable Cost is cost that cannot be influenced by the
management authority.
27. CLASSIFICATION BASED ON TIME
Based on the time of computation of the cost, it can be classified as
HISTORICAL COST and PREDETERMINED COST.
• Historical Cost is cost ascertained after occurrence. It is
determined based on the occurrence and can be verified based on
the records.
• Predetermined Cost is estimated costs are called as
predetermined cost and are computed in advance.
28. CLASSIFICATION BASED ON NORMALITY
Based on occurrence of the cost it can be classified as NORMAL
COST and ABNORMAL COST.
• Normal Cost is cost that are normal for a given level of output and
are routine part of production cost. It is charged to Trading
account.
• Abnormal cost is cost that are not usual to occur at a given level
of output and is not a part of the routine production cost. It is
charged to P/L Account
30. CLASSIFICATION OF COST – DECISION MAKING
• Cost which are specially computed
• Cost categories used for by the management for the
purpose of decision making.
• Calculation or computation required to take better
business decisions.
• May not be recorded or disclosed in the books of
accounts.
31. CLASSIFICATION OF COST – DECISION MAKING
SUNK COST
– Cost that already incurred.
– Cannot be changed by management decision.
Example: Marketing study carried out and product failed.
Microsoft writes off $7.6B, admits failure of Nokia acquisition
'Monumental mistake' by former CEO Steve Ballmer comes home to
roost
Source: https://www.computerworld.com/article/2945371/microsoft-writes-off-
76b-admits-failure-of-nokia-acquisition.html
32. CLASSIFICATION OF COST
DECISION MAKING
REPLACEMENT COST
– Market cost of replacing an asset.
Example: Cost of replacing production process from
labor intrinsic to machinery intrinsic
In 2016, Bata India invested Rs 300 crore over three years to
modernize its manufacturing facilities at West Bengal, Bihar
Karnataka and strengthen its retail network. Bata India added over
100 new retail stores, 31 franchisee stores & renovated more than
90 stores across India with these changes
Source: https://www.business-standard.com/article/companies/bata-india-
shifts-gears-to-rural-market-116080401029_1.html
33. CLASSIFICATION OF COST – DECISION MAKING
DIFFERENTIAL COST
– Also known as incremental cost.
– Increase or decrease in the total cost
that results from an alternate course
of action.
– Calculated by subtracting the cost of
one alternative from the cost of
another.
Example: Shift in saloon operation due to COVID
situation.
Haircut, Salon at Home: How to Book Urban
Company's Grooming Services in Lockdown 3.0
Source: https://www.news18.com/news/tech/haircut-salon-at-
home-how-to-book-urban-companys-grooming-services-in-
lockdown-3-0-2607047.html
34. CLASSIFICATION OF COST – DECISION MAKING
MARGINAL COST
– Also known as variable cost.
– Extra cost incurred in producing one additional unit of the
product. Helps management in decision making such as make
or buy pricing of products selection of sales mix etc.
OPPORTUNITY COST
– Sacrificial cost involved in accepting an alternate alternative.
35. CLASSIFICATION OF COST – DECISION MAKING
Imputed cost
– Also known as notional cost.
– Calculated for the purpose of decision making.
– Hypothetical cost which are specially computed outside the
accounting system
Example:
Rent of a building owned by a company. Rent for building already
owned by a company may not result in outflow of cash if the
management does not consider rent as an expense it may lead to
improper pricing of the product.
36. CLASSIFICATION OF COST – DECISION MAKING
CONVERSION COST
– Total cost of converting a raw material into a finished product.
– Sum of direct labour and factory overhead cost in the
production of a product
38. METHODS OF COSTING
• Refers to the techniques and processes employed in
the ascertainment of costs.
• Different methods of costing.
• Methods depend on:
– Nature and type of industry.
– Policy of the company.
– Managerial needs.
39. METHODS OF COSTING – JOB COSTING
• Costs are collected and accumulated for each job
separately
• Each job requires different approach/ work pattern/
process.
• Maintained separate to identity, analyze and segregate
costs.
40. METHODS OF COSTING – BATCH COSTING
• Involves transferring costs to a batch of
products.
• Each batch is a quantity of identical units.
• Applied when production is continuous.
• On completion, the total cost and number
of units in the batch is calculated.
• Then, the unit cost, selling price and
profitability of each unit is computed.
Example: Process food industry.
41. METHODS OF COSTING – PROCESS COSTING
• Costs are collected and accumulated
according processes
• Ascertain the costs of each operation or
stage of manufacture.
• Total cost determined based on respective
process through which the units pass.
• Ideal where the final product must go
through various process.
Example: Bottling of mineral water
42. METHODS OF COSTING – OPERATION COSTING
• Mix of job costing and process costing.
• Initially has identical processing for a
group of products.
• Finished using more product-specific
procedures.
• Applicable to the more complex
manufacturing environments.
Example: Manufacture of variants of same model of
car.
43. METHODS OF COSTING – UNIT COSTING
• Also known as output or single output
costing.
• Followed in businesses which produces
a single product on large scale
continuously
• Products are having uniform
homogeneous character.
• Helps in ascertainment of cost per unit.
• Cost Per Unit = Total Cost / Number of
Units Produced
Example: Electricity is measured in Kilowatts
44. METHODS OF COSTING – OPERATING COSTING
• Method of ascertaining the costs of
providing or operating a service.
• Varied nature of activities carried
out by the service undertakings.
• Total cost of rendering the service is
calculated.
Example: Stay at Hotel.
45. METHODS OF COSTING – UNIFORM COSTING
• Application of the same accounting and
costing principles, methods or procedures
uniformly.
• Various undertakings in the same industry
follow uniform practice.
• Application of a specific technique.
Example: Hotel industry
46. METHODS OF COSTING – MULTIPLE
COSTING
• Also known as composite costing.
• Product comprises of different assembled
parts.
• Cost has to be ascertained for the
component and finished product.
• Involves different or multiple methods of
costing.
Example: Plane manufacture
48. ELEMENTS OF COST
• Used in differentiating and bifurcating the cost.
• Elements of cost helps in recording cost.
• Helps in further reporting and analysis.
• Helps the management to control the costs better.
• Helps the management to implement decisions better.
• Provides with necessary data for management.
Three elements – Material, Labour and Expense.
Each element if further divided into direct and indirect.
49. MATERIAL COST
The cost of the commodities supplied to an undertaking is
called as Material Cost.
• Cost of material or the commodity used by the
organization
• Consumed as a part for its production process.
• Further divided into direct or indirect.
Example: Milk, water, tea powder, sugar etc. for making tea.
50. MATERIAL COST
Direct Material
• Raw material/input from which a product is to be produced
or manufactured.
• Varies according to the level of output.
For example: Wood is the direct material for furniture.
Indirect Material
• Material required to produce a product.
• Does not form a part of a finished product.
• Needed as part of production process.
For example: Nails are used in furniture.
51. LABOUR COST
Labour is the cost incurred in the form of remuneration
paid to the employees or labours of the organization.
• Workforce required to convert material into finished
product.
• Proportion to the total or overall cost - forms a major
component.
• Fair compensation needs to be paid & ensured by law.
• Compensation depends upon number of factors.
• Classified as Direct & Indirect cost.
52. LABOUR COST
Direct Labour Cost
• Cost incurred on those employees who directly take part in
the manufacturing process
• Easily identified with the individual cost center.
Example: Teachers in the department.
Indirect Labour Cost
• Cost incurred on those employees who do not directly take
part in the manufacturing process
• Cannot identified with the individual cost center.
Example: salary for college payroll employee.
53. EXPENSES
The cost of service provided to an undertaking and the
national cost of the use of owned asset.
• Costs of services provided to the organisation.
• Cost of all other material and labour.
• Needed to support the existing production process.
Example: Food for labour working in a factory
• Classified as direct or indirect.
54. EXPENSES
Direct Expenses
• Expenses directly identifiable with a process.
• Expenses which can be directly identified with the individual
cost centers.
Example: repair charges of machinery.
Indirect Expenses
• Expenses cannot be associated exclusively with a process.
• Expenses which cannot be directly identified with the
individual cost centres.
Example: telephone expenses.
56. DIVISION OF COST
• Elements of costs are divided into different categories for
evaluation and decision-making purposes
• Indirect costs are referred to as overheads.
Overheads
• Refers to all indirect expenses of running a business.
• Not linked to the manufacture of a product or rendering a
service.
• Ongoing expenses supporting the business.
Example: Telephone bill in a factory producing tiles.
57. DIVISION OF COST
Prime Cost
Direct Material + Direct Labour + Direct Expense
Overhead Cost
Indirect Material + Indirect Labour + Indirect Expense
61. DIVISION OF COST
Prime Cost
Direct Material + Direct Labour + Direct Expense
• Sum of all the direct elements of costs.
• Signified the total direct costs of production.
• Businesses need to calculate the prime cost of each
product.
• Ensures product lines are generating a profit.
63. COST SHEET
• Statement representing the various costs incurred.
• Cost representation at different stages of business
operations.
• Prepared in a tabular format.
• Determines the total cost or expenditure made by the
organization.
• Also represents cost of each unit of a product or service.
• Shows the various elements of cost.
• Prepared at regular intervals.
64. COST SHEET
FORMAT
Particulars Total Cost Cost/ Unit
Direct Material ***** *****
Direct Labour ***** *****
Direct Expenses ***** *****
PRIME COST ***** *****
Factory/ Works overhead ***** *****
FACTORY/ WORKS COST ***** *****
Office & Admin overhead ***** *****
COST OF PRODUCTION ***** *****
Selling & Distribution overhead ***** *****
TOTAL COST/ COST OF SALES ***** *****
Profit or Loss ***** *****
Sales ***** *****
65. COST SHEET - EXCLUSIONS
• Financial expenses are excluded from cost sheet:
– Cash discount
– Interest paid
– Preliminary expenses written off
– Goodwill written off
– Donations
– Income tax paid
– Dividend paid
67. COST SHEET
“A document which provides for the assembly of the detailed cost
of a cost centre or cost unit”
- CIMA UK
• Also know as production statement.
Purpose:
– Presents total cost and cost per unit of goods produced.
– Break up of cost element wise.
– Helps in comparative study.
– Helps management to fix the price.
68. COST SHEET
FORMAT
Particulars Total Cost Cost/ Unit
Direct Material ***** *****
Direct Labour ***** *****
Direct Expenses ***** *****
PRIME COST ***** *****
Factory/ Works overhead ***** *****
FACTORY/ WORKS COST ***** *****
Office & Admin overhead ***** *****
COST OF PRODUCTION ***** *****
Selling & Distribution
overhead
***** *****
TOTAL COST/ COST OF SALES ***** *****
Profit or Loss ***** *****
Sales ***** *****
69. COST SHEET PREPARATION
Identify and classify the different items in respective
Prime cost, Factory OH , Administrative overhead,
Selling & Distribution Overhead
70. COST SHEET PREPARATION
IDENTIFY THE FOLLOWING ITEMS
Name of Item Cost sheet classification
Purchase of Raw material Prime cost
Direct Wages Prime cost
Office appliances maintenance Administration overhead
Plant & Machinery maintenance Factory overhead
Factory building rent Factory overhead
Factory supervisors salary Factory overhead
Sales commission Selling and Distribution Overhead
Factory lighting Factory overhead
Taxes Administration overhead
71. COST SHEET PREPARATION
IDENTIFY THE FOLLOWING ITEMS
Name of Item Cost sheet classification
Sales travelling Selling and Distribution Overhead
Freight incurred on material Prime cost
Office rent Administration overhead
Sales promotion Selling and Distribution Overhead
Office Salary and expenses Administration overhead
Managers salary (Factory) Factory overhead
Depreciation – Plant Factory overhead
Work-in- Progress Factory overhead
Marketing salaries Selling and Distribution Overhead
72. COST SHEET PREPARATION
IDENTIFY THE FOLLOWING ITEMS
Name of Item Cost sheet classification
Distribution cost Selling and Distribution Overhead
Customer service cost Selling and Distribution Overhead
Rates and Insurance (office) Administration overhead
Lubricating Oil Factory overhead
Factory repairs and Maintenance Factory overhead
Running Expenses of Machine Factory overhead
Labour amenities Factory overhead
Carriage outward Selling and Distribution Overhead
Indirect wages Factory overhead
73. COST SHEET PREPARATION
IDENTIFY THE FOLLOWING ITEMS
Name of Item Cost sheet classification
Sundry office expenses Administration overhead
Salesmen Salaries Selling and Distribution Overhead
Advertising Selling and Distribution Overhead
Directors fees Administration overhead
Bad debts written off Selling and Distribution Overhead
Consumables Factory overhead
Carriage inward Prime cost
Expenditure on sales depot Selling and Distribution Overhead
Printing Administration overhead
74. COST SHEET PREPARATION
IDENTIFY THE FOLLOWING ITEMS
Name of Item Cost sheet classification
Rent for showroom Selling and Distribution Overhead
Legal charges Administration overhead
Plant depreciation Factory overhead
Directors salary Administration overhead
Bad debts written off Selling and Distribution Overhead
75. COST SHEET PREPARATION
QUESTION 1
Prepare a Cost sheet of the
following data relating to the
manufacture of bulbs.
The numbers of bulbs
manufactured in a month is 1,000
and a profit margin of 20% on the
total cost of good is expected on
the sale of bulbs.
Particulars Amount
Direct materials consumed 20,000
Direct labour 8,000
Indirect labour (in factory) 2,500
Supervision costs (in factory) 1,000
Factory rent 1,600
Factory lighting 600
Factory maintenance
consumables
100
Depreciation of machine 500
Office OH 8,000
Office salary 2,000
Misc. office expenses 1,000
77. QUESTION 2
Prepare a Cost sheet of the
following data relating to the
manufacture of bulbs.
The numbers of bulbs
manufactured in a month is
1,000.
Particulars Amount
Materials used for manufacture 5,500
Materials used for packaging 1,000
Materials used for selling 150
Materials used in factory 75
Materials used in office 125
Direct labour cost for production 1,000
Labour for supervision at factory 200
Factory direct expenses 500
Factory indirect expenses 100
Office expenses 125
Office equipment depreciation 75
Factory depreciation 175
Selling expenses 350
Material freight cost 500
Advertising 125
79. COST SHEET – TREATMENT OF STOCK
Stock in a firm is of three types:
a. Stock of raw material.
b. Stock of work in progress.
c. Stock of finished goods.
80. COST SHEET – Treatment OF STOCK
Stock of Raw material
• Material consumed during the production process.
• Part of the prime cost.
Treat when raw materials levels are declared:
Particulars Amount
Opening stock of raw materials ****
Add: Purchase ***
Less: Closing stock of raw materials ****
Cost of materials consumed ****
81. COST SHEET – TREATMENT OF STOCK
Stock of Work in Progress
• Goods that are semi finished.
• Part of factory overhead
Treat when work in progress levels are declared:
Particulars Amount
Prime Cost *****
Add: Factory overhead ****
Add: Opening stock of work in progress ****
Less: Closing stock work in progress ****
Factory/ Works Cost *****
82. COST SHEET – TREATMENT OF STOCK
Stock of Finished goods
• Considered along with administration overheard.
• Adjusted after calculation of cost of production.
Treat when finished goods levels are declared:
Particulars Amount
Factory/ Works Cost *****
Add: Office and administration overhead ****
Cost of production *****
Add: Opening stock of finished goods ****
Less: Closing stock of finished goods ****
Cost of Goods sold *****
84. QUESTION 3
ABC Ltd has provided
the following
information:
Prepare the cost sheet
from the above-
mentioned details.
Particulars Amount
Stock of raw material on 1 Jan 2020 75,000
Stock of raw material on 31 Jan 2020 91,500
Direct wages 52,500
Indirect wages 2,750
Sales 2,00,000
Work in progress on 1 Jan 2020 28,000
Work in progress on 31 Jan 2020 35,000
Purchase of raw material 66,000
Factory rent 15,000
Depreciation of machinery 3,500
Purchase expenses 1,500
Carriage outward 2,500
Advertising 3,500
Office rent 2,500
Salesmen commission 6,500
Stock of finished goods on 1 Jan 2020 54,000
86. QUESTION 4
Following information has
been obtained from the
records of a manufacturing
concern.
Prepare Cost sheet for the
year 2015.
Particulars 1-1-2015 31-12-2015
Stock of Raw materials 30,000 35,000
Work in progress 15,000 20,000
Stock of finished good 43,700 54,000
Particulars Amount
Indirect wages 9,720
Sales 3,25,000
Factory Rent & Rates 7,830
Office salaries 15,030
General Expenses 13,500
Office Rent 2,000
Rent of Show Room 1,200
Purchase of Raw material 1,20,000
Productive wages 90,000
Plant Repair 3,420
Depreciation on Plant 8,360
Factory Lighting 7,380
88. QUESTION 5
From the books of Accounts of
XYZ Enterprises, the following
details were extracted for the
year ending March 2020.
The managers time is shared
between factory and office in
the ratio of 20:80
Prepare the cost of sheet from
the following.
Particulars Amount
Opening stock of materials 1,88,000
Closing stock of materials 2,00,000
Materials purchased 8,32,00
Direct wages 2,38,400
Indirect wages 16,000
Salary for administrative staff 40,000
Freight charges inwards 32,000
Freight charges outwards 20,000
Sales 15,79,800
Cash discount allowed 14,000
Bad debts written off 18,800
Repairs for machinery 42,400
Factory rent 12,000
Office rent 6,400
Travelling expenses 12,400
Salesmen salary 33,600
Plant machinery depreciation 28,900
Furniture depreciation 2,400
Directors fee 24,000
Factory electricity 48,000
Fuel 64,000
Sale of scrap 500
90. QUESTION 6
Bharat Engineering Company
manufactured and sold 1,000
sewing machines in 2020. The
following are the details
obtained from the records of the
company:
The company plans to
manufacture 1,200 sewing
machines in 2021. You are
required to submit a statement
showing the price at which
machines would be sold at to
record a profit of 10% on the
selling price.
Particulars Amount
Cost of material 80,000
Wages paid 1,20,000
Direct manufacturing expenses 10,000
Factory expenses 50,000
Salaries 60,000
Rent 10,000
Selling expenses 30,000
General expenses 20,000
Sales 4,00,000
The following information has been provided to you:
a. Price of materials will rise by 20% compared to
previous level.
b. Wage rate will rise by 5%.
c. Factory expenses will rise in proportion to the
combined cost of materials and wages.
d. Selling expenses per unit will remain unchanged.
e. Other expenses will remain unaffected by the rise in
output.
92. QUESTION 7
The following are the details
of the expenses of PQRS Ltd
for the year 2020 for the
manufacture of 800 units:
Prepare the cost sheet for
2021 based on the above
provided information and the
below mentioned conditions.
• The output and sales were 1,000 units.
• The price of material will increase by 25% on the previous
year level.
• Wages during the year will increase by 12.5%.
• Manufacturing cost will increase in proportion to
combined cost of material and wages.
• Other expenses will remain unaffected by the increase of
output.
• A profit of 10% is expected from the selling price/ unit.
Particulars Amount
Cost of material 32,000
Direct wages 48,000
Manufacturing charges 20,000
Sales 1,60,000
Office salary 24,000
Rent 4,000
Selling expense 8,000
General expenses 12,000
Profit 12,000