PRESENTATION ON: : PRESENTATION ON: COST ACCOUNTING. SUBMITTED BY:
DEEPAK DHINGRA INDEX : INDEX Cost & Cost Accounting.
Nature of Cost Accounting.
Scope of Cost Accounting.
Importance of Cost Accounting.
Limitations of Cost Accounting.
Techniques & Methods of Cost Accounting.
Classification of Cost Accounting.
Specimen of Simple Cost Sheet. MEANING OF COST : MEANING OF COST “THE AMOUNT OF EXPENDITURE INCURRED ON OR TO ATTRIBUTABLE TO A SPECIFIED THING OR ACTIVITY”. THE SPECIFIC THING MAY BE A PRODUCT , JOB, SERVICES, PROCESS OR ANY ACTIVITY.”
ACCORDING TO I.C.M.A. MEANING OF COST ACCOUNTING : MEANING OF COST ACCOUNTING COST ACCOUNTING IS A SYSTEM OF CLASSIFYING, RECORDING & APPRO-PRIATE ALLOCATION OF EXPENDITURE IN SUCH A MANNER SO THAT PER UNIT & TOTAL COST OF GOODS PRODUCED OR SERVICES RENDERED CAN BE COMPUTED CORRECTLY. : DEFINATION OF COST ACCOUNTING.
“ COST ACCOUNTING IS THE TECHNIQUE & PROCESS OF ASCERTAINMENT OF COST.”
ACCORDING TO I.C.M.A. NATURE & CHARACTERISTICS OF COST ACCOUNTING : NATURE & CHARACTERISTICS OF COST ACCOUNTING SPECIAL BRANCH OF ACCOUNTING BASED ON DOUBLE ENTRY SYSTEM.
DETERMINE TOTAL COST & PER UNIT COST.
DETERMINES THE COST OF INCOM-PLETE WORK OR JOB.
PROVIDES MEASURES FOR CONTROL & GUIDANCE FOR VAROUS LEVELS OF MANAGEMENT. SCOPE OF COST ACCOUNTING. : SCOPE OF COST ACCOUNTING. ANALYSING THE PROFITABILITY OF PRODUCT, SERVICE, OR JOB.
ANALYSING OF THE TYPE & NATURE OF COST.
EXPLANATION OF CAUSES OF VARIA-NCES B/W ACTUAL COST & STANDARD COST.
ANALYSIS OF THE PROFIT OR LOSS OF THE ORGANISATION. : HELPFUL IN DETERMINATION OF SELLING, QUOTATION & TENDER PRICE.
HELPFUL FOR MANUFACTURING & SERVICE RENDERING ORGANISATION. IMPORTANCE OF COST ACCOUNTING. : IMPORTANCE OF COST ACCOUNTING. ADVANTAGES TO MANAGEMENT:
1. It helps in Price Fixation.
2. It helps in formulating Production Policies.
3. It helps to Control Inventory.
4. It provides cost data in regard to mate-rials, labour, overheads & other expenses. ADVANTAGES TO EMPLOYEES: : ADVANTAGES TO EMPLOYEES: Better Wages.
Low Labour Turnover.
Elimination of strikes & lockouts.
ADVANTAGES TO CONSUMER:
It provides Cost Control. These help the organization to offer product & services at lower prices & of good Quality. ADVANTAGES TO GOVT. : : ADVANTAGES TO GOVT. : It is useful for Govt. for deciding the state subsidy to Industry & also for Economic Planning. LIMITATIONS OF COST ACCOUNTING. : LIMITATIONS OF COST ACCOUNTING. 1. This system is based on Estimations & resu-lts differ from actualities .
2. Certain items of Expenses & Income are not recorded in this system while they are included in financial accounting.
3. Cost Accounting system is highly expensive.
4. This system is applicable to Manufacturing & Service rendering business only. TECHNIQUES & METHODS OF COSTING. : TECHNIQUES & METHODS OF COSTING. Techniques are different from methods. A technique is the way of doing a certain work whereas costing method refers to the methods of ascertaining cost of a product manufactured or services rendered. TYPES & TECHNIQUES OF COST ACCOUNTING. : TYPES & TECHNIQUES OF COST ACCOUNTING. Historical Costing:
In this tech. costs are ascertained after they have been incurred.
Here the standards are set first & then they are compared with actual performances. The difference b/w them is known as variance. Marginal Costing: “The ascertainment of marg-inal costs & of the effect on profit of changes in volume or type of output by differentiating b/w fixed cost & variable cost.” -I.C.M.A. : Marginal Costing: “The ascertainment of marg-inal costs & of the effect on profit of changes in volume or type of output by differentiating b/w fixed cost & variable cost.” -I.C.M.A. Direct Costing:
“The practice of charging all direct costs to operation, processes or products, leaving all indirect costs to be written off against profit in the period in which they arise.” -I.C.M.A. Absorption Costing: “The practice of charging all costs, both variable & fixed, to operations, processes or products.” -I.C.M.A. : Absorption Costing: “The practice of charging all costs, both variable & fixed, to operations, processes or products.” -I.C.M.A. Uniform Costing:
“The use by several under-takings of the same costing principles and/or practices.” -I.C.M.A. METHODS OF COSTING. : METHODS OF COSTING. Methods of Costing
Specific order Continuous operation
costing method costing method Specific Order Costing Method: : Specific Order Costing Method: Job Costing:
It is a system of costing in which cost are ascertained in terms of specific jobs or orders which are not comparable with each other & non-repetitive in nature.
It is a costing method which applies where work is executed under customer’s specific requirements & each order is of long duration. Batch Costing: In this method, a batch of similar or identical products is treated as job. : Batch Costing: In this method, a batch of similar or identical products is treated as job. Target Costing:
In this method, before comm-encement of job the cost of work is estimated with the help of experts. Continuous Operation Costing Method: : Continuous Operation Costing Method: Process Costing:
This method is applicable to those industries which manufactures a no. of units of output requiring processing.
Single or Output Costing:
This method is used where the production is Uniform & consists only if a single product. Operation Costing: In this method, the cost of each operation in the process of production is ascertained. : Operation Costing: In this method, the cost of each operation in the process of production is ascertained. Operating Costing:
This method is applied to those undertakings which do not manuf-acture goods but render services, e.g., the Transport companies. : Departmental Costing:
This method is appli-cable where the cost of a department or a cost-centre is required to be ascertained.
Composite or Multiple Costing:
Where more than one method is used in conjunction, the method becomes a Composite or Multiple Costing Method. CLASSIFICATION OF COST : CLASSIFICATION OF COST The cost can be classified into the following:
According to Elements.
According to Functions or Operations.
According to Nature or Behavior.
According to Controllability.
According to Normality.
Other cost. : 1. ACCORDING TO ELEMENTS Direct Cost Indirect Cost 2. ACCORDING TO FUNCTIONS Production Administration Selling Distribution
Cost Cost Cost Cost 3. ACCORDING TO NATURE : 3. ACCORDING TO NATURE 4.ACCORDING TO CONTROLABILITY Fixed Cost Variable Cost Semi-Fixed or
Semi-Variable Cost Controllable Cost Uncontrollable Cost 5. ACCORDING TO NORMALITY : 5. ACCORDING TO NORMALITY 6. OTHER COSTS:
Idle Facilities Cost Normal Cost Abnormal Cost SPECIMEN OF COST SHEETCOST SHEET (FOR ……..)OUTPUT……….. UNIT……….. : SPECIMEN OF COST SHEETCOST SHEET (FOR ……..)OUTPUT……….. UNIT……….. : THANKS