PPT ON COST A.C.

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Presentation Transcript

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. Standard Costing: 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. Contract Costing: 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: Research Cost Development Cost Pre-production Cost Idle Facilities Cost Normal Cost Abnormal Cost

SPECIMEN OF COST SHEETCOST SHEET (FOR ……..)OUTPUT……….. UNIT……….. : 

SPECIMEN OF COST SHEETCOST SHEET (FOR ……..)OUTPUT……….. UNIT………..

THANKS