Costing Concepts, Cost Sheet, Objectives, Types of Cost Centre, Methods of Costing.
CLASSIFICATION OF COSTS
OBJECTIVES OF COST ACCOUNTING
- Ascertainment of cost
- Determination of selling price
- Ascertaining the profit of each activity
- Cost control
- Costing Concepts, Cost Sheet, Objectives, Types of Cost Center, Methods of Costing.
Three-fold assumptions in cost reduction
- There is a saving in unit cost.
- Such saving is of permanent nature.
- The utility and quality of the goods and services remain unaffected, if not improved.
ESSENTIAL FACTORS FOR INSTALLING A COST ACCOUNTING SYSTEM
- The objective of the system.
- Scope and extent of coverage.
- The general organisational set up of the business.
- The technical aspects of the concern.
- The attitude and behavior of the people in the organisation
- The manner in which different variable expenses would be affected with the expansion or cessation of different operations.
- The manner in which Cost and Financial Accounts could be inter-locked into a single integral accounting system.
- The maximum amount of information that would be sufficient (Information Requirements).
PRACTICAL DIFFICULTIES WHILE INSTALLING A COSTING SYSTEM
- Lack of support from top management.
- Resistance from accounting staff.
- Lack of co–operation at the operating levels.
- Shortage of trained staffs.
- Costs of the operating systems.
FEATURES OF A GOOD COST ACCOUNTING SYSTEM
- It should be tailor-made
- Collected Data should be accurate
- Cooperation from all other departments
- Cost and Benefit should match
- It should not sacrifice the utility by including unnecessary details
- Usage of network analysis
- Faith and Confident
It is defined as a
- person or
- an item of equipment or
- group of these
COST CENTER TYPES
COST UNITIt is a unit of
- Service or
- Time or
Combination of these
- Cost Centers;
- Profit Centers; and
- Investment Centers;
Methods of segregating Semi-variable costs into fixed and variable costs
- Graphical method
- High points and low points method
- Analytical method
- Comparison by period or level of activity method
- Least squares method
METHODS OF COSTING
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