The document discusses various methods of costing including unit costing, job costing, contract costing, batch costing, operating/service costing, process costing, multiple costing, and uniform costing. It provides examples of different industries that use each method. It also discusses other costing techniques like marginal costing, absorption costing, standard costing, and historical costing. The document outlines the need for reconciliation when cost and financial accounts are maintained separately.
Marginal costing is a technique that classifies costs into fixed and variable costs. Only variable costs are considered in calculating the cost per unit of a product. The difference between sales revenue and variable costs is known as the contribution, which is used to cover fixed costs and determine profitability. Marginal costing helps managers make decisions around pricing, production levels, and profitability by focusing on the relationship between contribution and sales volume. The breakeven point is where total sales revenue equals total costs, indicating no profit or loss.
Contract costing is a method of accounting for construction projects that take over a year to complete. Each construction project is treated as a separate cost unit or "contract". The costs incurred are tracked to each individual contract and profits or losses are calculated periodically. At the end of each accounting period, only a portion of estimated profits for incomplete contracts are recognized based on the percentage of work completed. This helps match revenues with expenses over the life of long-term contracts.
Overhead costs are indirect expenses that are incurred in addition to direct material and direct labor costs. They include indirect materials, indirect labor, and indirect expenses. Overheads must be classified, collected, allocated to cost centers, and then absorbed or charged to production units. They are classified as factory, office/administrative, or selling/distribution overheads. Overhead allocation involves allotting whole costs to cost centers, while apportionment involves allotting proportionate shares of common costs between cost centers. Absorption of overheads involves charging production with an equitable share of overhead costs using an absorption rate.
1. to understand the basic principles of Material Control
2. to study the procedures of Purchase, Storing and Issues
3. to acquaint with the latest techniques in inventory control
4. to understand the pricing of issues
The document discusses various classifications and procedures related to costing. It defines key costing terms like variable costs, fixed costs, direct costs, indirect costs, product costs, period costs, relevant costs, and more. Costs are classified based on their behavior, traceability, purpose, and controllability. The elements of cost - material, labor, and expenses - are also categorized as direct or indirect. Procedures for determining costs include identifying cost elements, classifying costs, and allocating common/indirect costs to arrive at the total cost of cost objects.
This document discusses materials management and inventory control. It defines key terms like materials, inventory, and material control. The objectives of material control are to have the right materials available when needed and to purchase efficiently. Different methods for valuing stock are described, including FIFO, LIFO, weighted average, and specific identification. The economic order quantity formula is provided to determine optimal order sizes. Level setting establishes maximum, minimum, and reorder levels to avoid overstocking or understocking. An example calculation demonstrates how to determine these three control levels.
Marginal costing is a technique that classifies costs into fixed and variable costs. Only variable costs are considered in calculating the cost per unit of a product. The difference between sales revenue and variable costs is known as the contribution, which is used to cover fixed costs and determine profitability. Marginal costing helps managers make decisions around pricing, production levels, and profitability by focusing on the relationship between contribution and sales volume. The breakeven point is where total sales revenue equals total costs, indicating no profit or loss.
Contract costing is a method of accounting for construction projects that take over a year to complete. Each construction project is treated as a separate cost unit or "contract". The costs incurred are tracked to each individual contract and profits or losses are calculated periodically. At the end of each accounting period, only a portion of estimated profits for incomplete contracts are recognized based on the percentage of work completed. This helps match revenues with expenses over the life of long-term contracts.
Overhead costs are indirect expenses that are incurred in addition to direct material and direct labor costs. They include indirect materials, indirect labor, and indirect expenses. Overheads must be classified, collected, allocated to cost centers, and then absorbed or charged to production units. They are classified as factory, office/administrative, or selling/distribution overheads. Overhead allocation involves allotting whole costs to cost centers, while apportionment involves allotting proportionate shares of common costs between cost centers. Absorption of overheads involves charging production with an equitable share of overhead costs using an absorption rate.
1. to understand the basic principles of Material Control
2. to study the procedures of Purchase, Storing and Issues
3. to acquaint with the latest techniques in inventory control
4. to understand the pricing of issues
The document discusses various classifications and procedures related to costing. It defines key costing terms like variable costs, fixed costs, direct costs, indirect costs, product costs, period costs, relevant costs, and more. Costs are classified based on their behavior, traceability, purpose, and controllability. The elements of cost - material, labor, and expenses - are also categorized as direct or indirect. Procedures for determining costs include identifying cost elements, classifying costs, and allocating common/indirect costs to arrive at the total cost of cost objects.
This document discusses materials management and inventory control. It defines key terms like materials, inventory, and material control. The objectives of material control are to have the right materials available when needed and to purchase efficiently. Different methods for valuing stock are described, including FIFO, LIFO, weighted average, and specific identification. The economic order quantity formula is provided to determine optimal order sizes. Level setting establishes maximum, minimum, and reorder levels to avoid overstocking or understocking. An example calculation demonstrates how to determine these three control levels.
This document discusses overhead costs and their accounting treatment. It defines overheads as indirect costs that cannot be directly attributed to a specific cost object. The document outlines the key steps in overhead accounting: classification of overheads, codification and collection, allocation and apportionment to cost centers, and absorption into product costs. It provides examples of different bases for classifying, allocating, and apportioning overheads. The document also discusses reapportioning service department costs to production departments through various secondary distribution methods like repeated distribution and trial and error.
Cost accounting is a formal system to ascertain and control costs of products and services. It involves determining actual costs incurred through cost ascertainment and estimating future costs. The objectives of cost accounting are cost ascertainment, control, guiding business decisions, and determining selling prices. Cost accounting provides both historical and estimated cost information for management control and decision making.
Contract costing is a method of accounting for construction or manufacturing projects that take longer than one accounting period to complete. It involves opening a separate account for each contract to track direct costs like materials, labor, and overhead. As work is completed and certified, the contract account is credited for the corresponding portion of the contract price to calculate the profit or loss on that portion. For incomplete contracts at the end of an accounting period, only a portion of the estimated total profit is recognized depending on how much of the work has been certified complete. This method aims to match revenues and expenses across accounting periods for long-term contracts.
Overheads and classifcation of overheads geetarajan73
This document discusses different ways to classify overhead costs. It defines overhead costs as expenses that cannot be directly traced to a specific unit of output. It then describes four main ways to classify overheads:
1. Function-wise classification divides overheads into factory, administration, selling, and distribution overheads.
2. Element-wise classification separates overheads into indirect materials, indirect labor, and indirect expenses.
3. Variability-wise classification categorizes overheads as fixed, variable, or semi-variable based on their relationship to production volume.
4. Control-wise classification distinguishes between controllable and uncontrollable overheads based on whether management can control them.
The document provides
The document discusses various methods and concepts in cost accounting, including:
1. Different types of costing methods like unit costing, job costing, contract costing, batch costing, operating costing, process costing, and multiple/uniform costing.
2. The need to reconcile cost and financial accounts when they are maintained separately, to check for differences in reported profit/loss.
3. Key aspects of cost sheets like classifying cost components, ascertaining product costs, fixing selling prices, and aiding cost control and management decisions.
This document discusses material control and management. It defines direct and indirect materials, and explains that material control aims to ensure the right quality and quantity of materials are available at the right time and place at minimum cost. Material control involves both accounting and operational aspects like purchase requisitions, bin cards to track inventory, and a stores ledger to record quantities and values of materials. The goals of material control are to maintain adequate inventory levels while avoiding excessive investment, wastage, and obsolescence of materials.
Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
Job costing and process costing are two types of costing methods. Job costing is used when production is done in small batches to meet specific customer orders, with identifiable units tracked through production. Process costing is used for continuous production like chemicals, where costs are averaged over total units produced. Key differences are job costing tracks individual jobs while process costing averages costs over production batches. Both aim to determine accurate costs to measure profitability.
Vouching involves examining documentary evidence to verify transactions recorded in accounting books. It establishes the accuracy and authenticity of entries.
Some key aspects of vouching include checking that vouchers are numbered and cancelled, examining high risk transactions like those with owners, and verifying dates, amounts, and names match the cash book. The auditor must also consider the nature of payments.
Vouching is important as it forms the basis for further audit work and fulfills the purpose of checking entries. It helps ensure transactions are valid, correctly recorded, and supported by evidence. This detects errors and potential fraud.
The objective of the ppt of Elements of Costs and classification of expenditure is to have precise information, especially for the non commerce management students. I believe this would help them to understand the subject easily.
Variance analysis compares actual performance to budgets to identify deviations. There are different types of variances including material, labor, and overhead variances. Material variances measure differences in price and quantity used versus standard. Labor variances include rate, efficiency, idle time, mix, and yield. Overhead variances measure differences in variable and fixed overhead expenditures and volumes versus standards. The goal is to control costs by investigating variances and their causes.
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.
Process costing is a method used by manufacturing industries to calculate the cost of production at each stage of converting raw materials into finished goods. It involves allocating total manufacturing costs to products based on normal production levels. Process costing is used in industries like chemicals, textiles, steel, and sugar that involve sequential production processes with continuous flow of goods. The method determines an average cost per equivalent unit and helps control costs, calculate inventory values, and assign product prices at each stage of multiple processes.
This document discusses process costing and compares it to job order costing. Process costing is used when a company mass produces uniform products continuously. Costs are tracked by production department rather than individual jobs. Equivalent units of production are calculated using the weighted average method to determine the cost per unit. The key document is the production cost report which shows quantity, costs and unit costs by department. A comprehensive example is provided to illustrate calculating equivalent units, unit costs and completing a production cost report for the mixing department of a company that makes waffles.
Cost accounting is a formal system used to ascertain and control costs of products and services. The objectives of cost accounting include ascertaining costs, controlling costs, and guiding business policies. Cost accounting differs from financial accounting in its purpose, statutory requirements, cost analysis, periodicity of reporting, and control aspects. Cost centers, cost units, and methods of costing like job costing and process costing are used to allocate costs. Elements of cost include direct and indirect materials, direct and indirect labor, and expenses like production, administration, selling and distribution overheads. Total cost is made up of prime cost, works cost, cost of production and total cost or cost of sales.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
This document provides instructions for preparing final accounting statements, including a profit and loss account and balance sheet. It defines key terms like gross profit, cost of goods sold, direct expenses, and indirect expenses. It explains how to prepare a trading and profit and loss account, showing gross profit, expenses, net profit or loss. It also defines current and fixed assets and notes that a balance sheet shows the financial position of a business by reporting asset and liability balances. The overall purpose is to explain the accounting cycle and the process of preparing final accounting statements.
Absorption Of Overheads-B.V.RaghunandanSVS College
Absorption is the process of allocating overhead costs to cost centers or production departments based on units produced. There are several methods for absorbing overheads including: 1) the production unit method, 2) percentage of direct material cost method, 3) percentage of direct labour cost method, 4) percentage of prime cost method, 5) labour hour method, and 6) machine hour rate method. The machine hour rate method has advantages of being scientific, measuring actual working time and idle time, and allowing comparison of costs and efficiency between machines, but it also has disadvantages of additional work, cost, and not being suitable for labour intensive industries or when machine hours cannot be calculated.
01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
03. Understand the Primary and Secondary Distribution of Overheads.
04. Understand the Traditional & Activity Based Costing methods
05. Identify the value added & non value added activity
Equivalent production in Cost Accounting Sanjeet Yadav
The above slide covers meaning, definition, methods of calculation of Work in Progress (FIFO, LIFO and average cost methods) and procedure of valuation of work in progress in Equivalent production (Concept of Cost Accounting).
This document discusses various methods and types of costing used in accounting. It describes unit costing, job costing, contract costing, batch costing, operating/service costing, process costing, multiple costing, uniform costing, marginal costing, absorption costing, standard costing, and historical costing. It also covers reconciliation of cost and financial accounts, and integral versus non-integral accounting methods. The overall purpose is to outline different approaches to determining and classifying costs that are suited to various industries and types of production.
This document discusses different costing techniques used in various industries and businesses. It provides examples of four costing techniques - marginal costing, standard costing, budgetary costing and how they help in decision making, cost control and cost reduction. Marginal costing helps management take short-term decisions and control variable costs. Standard costing enables cost control and performance evaluation by comparing actual and standard costs. Budgetary costing facilitates achieving organizational goals through periodic review of actual performance against budgets.
This document discusses overhead costs and their accounting treatment. It defines overheads as indirect costs that cannot be directly attributed to a specific cost object. The document outlines the key steps in overhead accounting: classification of overheads, codification and collection, allocation and apportionment to cost centers, and absorption into product costs. It provides examples of different bases for classifying, allocating, and apportioning overheads. The document also discusses reapportioning service department costs to production departments through various secondary distribution methods like repeated distribution and trial and error.
Cost accounting is a formal system to ascertain and control costs of products and services. It involves determining actual costs incurred through cost ascertainment and estimating future costs. The objectives of cost accounting are cost ascertainment, control, guiding business decisions, and determining selling prices. Cost accounting provides both historical and estimated cost information for management control and decision making.
Contract costing is a method of accounting for construction or manufacturing projects that take longer than one accounting period to complete. It involves opening a separate account for each contract to track direct costs like materials, labor, and overhead. As work is completed and certified, the contract account is credited for the corresponding portion of the contract price to calculate the profit or loss on that portion. For incomplete contracts at the end of an accounting period, only a portion of the estimated total profit is recognized depending on how much of the work has been certified complete. This method aims to match revenues and expenses across accounting periods for long-term contracts.
Overheads and classifcation of overheads geetarajan73
This document discusses different ways to classify overhead costs. It defines overhead costs as expenses that cannot be directly traced to a specific unit of output. It then describes four main ways to classify overheads:
1. Function-wise classification divides overheads into factory, administration, selling, and distribution overheads.
2. Element-wise classification separates overheads into indirect materials, indirect labor, and indirect expenses.
3. Variability-wise classification categorizes overheads as fixed, variable, or semi-variable based on their relationship to production volume.
4. Control-wise classification distinguishes between controllable and uncontrollable overheads based on whether management can control them.
The document provides
The document discusses various methods and concepts in cost accounting, including:
1. Different types of costing methods like unit costing, job costing, contract costing, batch costing, operating costing, process costing, and multiple/uniform costing.
2. The need to reconcile cost and financial accounts when they are maintained separately, to check for differences in reported profit/loss.
3. Key aspects of cost sheets like classifying cost components, ascertaining product costs, fixing selling prices, and aiding cost control and management decisions.
This document discusses material control and management. It defines direct and indirect materials, and explains that material control aims to ensure the right quality and quantity of materials are available at the right time and place at minimum cost. Material control involves both accounting and operational aspects like purchase requisitions, bin cards to track inventory, and a stores ledger to record quantities and values of materials. The goals of material control are to maintain adequate inventory levels while avoiding excessive investment, wastage, and obsolescence of materials.
Marginal costing is a costing technique wherein the marginal cost, i.e. variable cost is charged to units of cost, while the fixed cost for the period is completely written off against the contribution.
Job costing and process costing are two types of costing methods. Job costing is used when production is done in small batches to meet specific customer orders, with identifiable units tracked through production. Process costing is used for continuous production like chemicals, where costs are averaged over total units produced. Key differences are job costing tracks individual jobs while process costing averages costs over production batches. Both aim to determine accurate costs to measure profitability.
Vouching involves examining documentary evidence to verify transactions recorded in accounting books. It establishes the accuracy and authenticity of entries.
Some key aspects of vouching include checking that vouchers are numbered and cancelled, examining high risk transactions like those with owners, and verifying dates, amounts, and names match the cash book. The auditor must also consider the nature of payments.
Vouching is important as it forms the basis for further audit work and fulfills the purpose of checking entries. It helps ensure transactions are valid, correctly recorded, and supported by evidence. This detects errors and potential fraud.
The objective of the ppt of Elements of Costs and classification of expenditure is to have precise information, especially for the non commerce management students. I believe this would help them to understand the subject easily.
Variance analysis compares actual performance to budgets to identify deviations. There are different types of variances including material, labor, and overhead variances. Material variances measure differences in price and quantity used versus standard. Labor variances include rate, efficiency, idle time, mix, and yield. Overhead variances measure differences in variable and fixed overhead expenditures and volumes versus standards. The goal is to control costs by investigating variances and their causes.
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.
Process costing is a method used by manufacturing industries to calculate the cost of production at each stage of converting raw materials into finished goods. It involves allocating total manufacturing costs to products based on normal production levels. Process costing is used in industries like chemicals, textiles, steel, and sugar that involve sequential production processes with continuous flow of goods. The method determines an average cost per equivalent unit and helps control costs, calculate inventory values, and assign product prices at each stage of multiple processes.
This document discusses process costing and compares it to job order costing. Process costing is used when a company mass produces uniform products continuously. Costs are tracked by production department rather than individual jobs. Equivalent units of production are calculated using the weighted average method to determine the cost per unit. The key document is the production cost report which shows quantity, costs and unit costs by department. A comprehensive example is provided to illustrate calculating equivalent units, unit costs and completing a production cost report for the mixing department of a company that makes waffles.
Cost accounting is a formal system used to ascertain and control costs of products and services. The objectives of cost accounting include ascertaining costs, controlling costs, and guiding business policies. Cost accounting differs from financial accounting in its purpose, statutory requirements, cost analysis, periodicity of reporting, and control aspects. Cost centers, cost units, and methods of costing like job costing and process costing are used to allocate costs. Elements of cost include direct and indirect materials, direct and indirect labor, and expenses like production, administration, selling and distribution overheads. Total cost is made up of prime cost, works cost, cost of production and total cost or cost of sales.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
This document provides instructions for preparing final accounting statements, including a profit and loss account and balance sheet. It defines key terms like gross profit, cost of goods sold, direct expenses, and indirect expenses. It explains how to prepare a trading and profit and loss account, showing gross profit, expenses, net profit or loss. It also defines current and fixed assets and notes that a balance sheet shows the financial position of a business by reporting asset and liability balances. The overall purpose is to explain the accounting cycle and the process of preparing final accounting statements.
Absorption Of Overheads-B.V.RaghunandanSVS College
Absorption is the process of allocating overhead costs to cost centers or production departments based on units produced. There are several methods for absorbing overheads including: 1) the production unit method, 2) percentage of direct material cost method, 3) percentage of direct labour cost method, 4) percentage of prime cost method, 5) labour hour method, and 6) machine hour rate method. The machine hour rate method has advantages of being scientific, measuring actual working time and idle time, and allowing comparison of costs and efficiency between machines, but it also has disadvantages of additional work, cost, and not being suitable for labour intensive industries or when machine hours cannot be calculated.
01.Understand the concept of ‘Overheads’.
02.Understand classification, allocation, apportionment and absorption of overheads.
03. Understand the Primary and Secondary Distribution of Overheads.
04. Understand the Traditional & Activity Based Costing methods
05. Identify the value added & non value added activity
Equivalent production in Cost Accounting Sanjeet Yadav
The above slide covers meaning, definition, methods of calculation of Work in Progress (FIFO, LIFO and average cost methods) and procedure of valuation of work in progress in Equivalent production (Concept of Cost Accounting).
This document discusses various methods and types of costing used in accounting. It describes unit costing, job costing, contract costing, batch costing, operating/service costing, process costing, multiple costing, uniform costing, marginal costing, absorption costing, standard costing, and historical costing. It also covers reconciliation of cost and financial accounts, and integral versus non-integral accounting methods. The overall purpose is to outline different approaches to determining and classifying costs that are suited to various industries and types of production.
This document discusses different costing techniques used in various industries and businesses. It provides examples of four costing techniques - marginal costing, standard costing, budgetary costing and how they help in decision making, cost control and cost reduction. Marginal costing helps management take short-term decisions and control variable costs. Standard costing enables cost control and performance evaluation by comparing actual and standard costs. Budgetary costing facilitates achieving organizational goals through periodic review of actual performance against budgets.
Management accounting provides information to management for planning, controlling, and decision making. It involves identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating financial information. Management accounting also includes preparing financial reports for external stakeholders. Cost accounting is a key part of management accounting and involves determining and tracking the costs of products, services, activities or resources.
Cost accounting is used to track the various costs of production and services. It involves maintaining detailed records of materials, labor, and expenses for products. This allows businesses to understand per-unit costs, control costs, and provide reliable cost data for decision making. Cost accounting techniques include standard costing, marginal costing, single costing for uniform products, process costing for multi-step production, and departmental costing for multiple products. Key factors for an effective cost accounting system include timely cost information, cooperation across departments, efficient production processes, qualified accounting staff, and honest management.
This document discusses various methods, techniques, and systems of costing. It describes job costing, contract costing, batch costing, process costing, operation costing, and others. It also covers techniques like marginal costing, direct costing, and absorption costing. For systems of costing, it explains historical costing using post-costing and continuous costing, as well as standard costing.
This document provides an overview of cost accounting basics, including:
1. It defines cost accounting and its objectives such as preparation of cost statements, ascertaining profitability, and formulating business policies.
2. It outlines the functions of cost accounting like ascertaining, estimating, and controlling costs to improve efficiency and reduce costs.
3. It describes a cost sheet, which is a report that accumulates all costs associated with a product or job, and can be used for cost control and setting future prices.
This document discusses various costing methods and techniques. It defines key terms like cost, costing, and cost accounting. It identifies Luca Pacioli as the father of cost accounting. The main costing methods discussed are specific order costing methods like job costing, contract costing, and batch costing, as well as continuous operation costing methods like process costing, single/output costing, and operating/service costing. The document also outlines techniques like historical costing, standard costing, marginal costing, direct costing, absorption costing, and uniform costing.
This document is a project report submitted by a student on the topic of operating costing. It provides an introduction to operating costing and cost accounting. It defines operating costs and operating costing, and explains that operating costing is used to determine the cost of providing a service. The document outlines different costing methods and provides examples of operating costing for transport, hotels, and hospitals.
The document provides an overview of cost accounting concepts. It defines cost accounting as the process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information to permit informed judgments and decisions by users of the information. It discusses the objectives, scope, importance and limitations of cost accounting. It also covers the classification of costs based on different criteria such as nature, variability, controllability, and managerial functions. The document provides examples and explanations of key cost accounting terms and concepts.
This document provides an introduction to cost accounting. It defines cost accounting as the process of identifying, measuring, accumulating, analyzing, preparing, interpreting, and communicating information to permit informed judgments and decisions by users of the information. It discusses the differences between cost accounting, financial accounting, and management accounting. Key aspects of cost accounting covered include objectives, scope, importance, limitations, and classifications of costs based on nature, variability, component, controllability, and managerial function. The document also provides examples to illustrate different types of costs.
Process costing is an accounting method used to assign costs to units produced in continuous or repetitive processes. Costs like direct materials, direct labor, and manufacturing overhead are accumulated and averaged over total units produced during a period, then allocated to individual units. This contrasts with job costing, which tracks costs of individual jobs. Process costing is suitable when identical or similar units are mass produced continuously, as in oil refining or food manufacturing. Key aspects of process costing include determining equivalent units, allocating total costs based on normal or actual output, and assigning costs to completed units and work-in-process inventory.
Cost and management accounting provides managers with detailed cost information to control operations and plan for the future. Cost accounting information is used for financial accounting and by managers for decision making. Management accounting provides economic and financial information for internal users. Cost concepts like cost objects, cost pools, and cost drivers are introduced. Costs are classified by elements, functions, traceability, behavior, and controllability. Product costs include direct materials, direct labor, and manufacturing overhead and become inventory until goods are sold. Period costs are expenses of the current period. Job order costing and process costing are introduced as costing systems. Just-in-time processing, activity-based costing, cost-volume-profit analysis, contribution margin,
Hello Friends!
This is the best ppt on 'Production Cost Concepts'. I tried to include all the main topics that will also be helpful for university exams. All the topics has been explained up to the point along with the required formula.
I also tried to keep the ppt as simple as possible not including any complex language. Hope you will clear all your doubts and will also learn something new in the field of Manufacturing Technology.
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#Production #Productuctioncost #manufacturing #technology
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Cost accounting is a process that collects, records, analyzes, and evaluates costs to advise management on the most cost-efficient course of action. It originated during the Industrial Revolution to help managers understand complex business costs. Costs are classified as either variable, meaning they change with production volume, or fixed, remaining constant regardless of production levels. Key cost objects include direct materials, direct labor, and manufacturing overhead. Analyzing these cost objects allows for more accurate cost calculation and identification of inefficient activities to improve cost efficiency.
The document provides an introduction to cost accounting, including basic definitions, objectives, importance, and the need for cost accounting systems. It discusses key aspects of installing a cost accounting system, such as ensuring the system is informative, simple, accurate, and supported by management. The system should be tailored to the technical, physical, and procedural aspects of the organization. Overall, the summary establishes that cost accounting is important for management decision making, cost control, and determining the profitability of individual products, contracts, and processes.
PPCE unit 3 (ME8793 – PROCESS PLANNING AND COST ESTIMATION) TAMILMECHKIT
UNIT III - INTRODUCTION TO COST ESTIMATION
Importance of costing and estimation –methods of costing-elements of cost estimation –Types of estimates – Estimating procedure- Estimation labor cost, material cost- allocation of over head charges- Calculation of depreciation cost
Process costing is a method of assigning costs to products in a manufacturing environment where standardized goods are produced continuously. Costs are accumulated for each stage of production, or process, and then averaged across all units produced during an accounting period. This allows costs to be tracked by production department and allocated to individual units. Process costing is commonly used for industries that produce homogeneous goods like chemicals, textiles, food products, and more.
Marginal costing is a method used to determine the cost of increasing or decreasing production. It includes both fixed and variable costs, with fixed costs only included if production is being increased. The marginal cost is calculated as the change in total cost from a one unit change in production. Absorption costing is an accounting method that allocates all production costs, including fixed costs, to inventory. This increases the reported value of inventory and costs per unit. Key steps include developing cost pools, determining usage, and calculating allocation rates to distribute costs to each unit produced.
This document discusses key concepts in cost accounting, including the meaning and objectives of cost accounting, the relationship between cost accounting and other types of accounting, elements of cost like direct and indirect costs, and cost classification. It defines important cost accounting terms and concepts, explains the general principles and advantages/limitations of cost accounting, and describes how a cost sheet is used to analyze costs.
Similaire à 4methods of costing in cost accounting.pdf (20)
1.2 objectives of financial management/ cfNeha234608
This document discusses the objectives of financial management for firms. It considers different potential goals for firms, such as profit maximization, earnings per share (EPS) maximization, and revenue maximization. However, it argues that the objective should be value maximization, which takes into account factors like present and future earnings, timing, risk, and dividend policy. Value maximization is good for both shareholders as owners and for society more broadly. Financial managers can increase firm value by making good investment, financing, and dividend decisions.
10Responsibility Accounting for managers.pptxNeha234608
Responsibility accounting is a management accounting system that assigns accountability for planning, budgeting, and cost control to individual responsibility centers. There are four main types of responsibility centers: cost centers, which are accountable for controlling costs; revenue centers, which are accountable for generating revenue; profit centers, which are accountable for profits; and investment centers, which are accountable for investments and returns. Responsibility accounting increases manager accountability and supports decision-making, but can also lead to conflicts between departments if not implemented carefully.
objectives of corporate finance- FM .pptNeha234608
The document discusses the objectives of financial management. It considers various potential goals for a firm, such as profit maximization, earnings per share (EPS) maximization, and revenue maximization. However, it argues that the objective should be value maximization, which takes into account factors like present and future earnings, timing, risk, and dividend policy. Value maximization serves the interests of shareholders, society, employees, and other stakeholders. Financial managers can increase firm value through good investment, financing, and dividend decisions.
This document discusses the time value of money and how to calculate present and future values. It defines the time value of money as the principle that a unit of currency is worth more at one point in time than another due to factors like uncertainty, inflation, and investment opportunities. The key techniques covered are compounding, which calculates future value, and discounting, which calculates present value. Formulas are provided to calculate the future and present values of single amounts, annuities, and cash flows using interest rates and interest factor tables.
This document discusses various sources of finance for companies including equity shares, preference shares, debentures, and lease financing. It provides details on each type of financing such as their advantages and disadvantages for both companies and investors. Equity shares provide a permanent source of funds but have a high cost, while debentures are a cheaper source of finance but carry legal obligations to repay interest and principal. Preference shares offer a fixed dividend but no certainty of redemption. Lease financing can be an additional source of finance but is also a costly option with restrictions on asset use.
This document provides an introduction to financial management. It defines financial management as the activity of planning, raising, controlling, and administering funds for a business. The key functions of financial management include determining financial needs, making financing, investment, and working capital decisions, setting dividend policy, financial control, and routine functions. The objectives of financial management provide a framework for investment, financing, and dividend decisions. Profit maximization and wealth maximization are discussed as two potential objectives, along with their advantages and disadvantages.
This document contains a balance sheet for Maynard Company as of June 30th and asks three questions. It asks to prepare an income statement for June, explain why the change in cash was greater than net income, and explain why the cost of sales amounts of $14,715 and $36,030 are incorrect.
This document discusses cost classification and cost behavior analysis for decision making. It provides examples of classifying costs as direct materials, direct labor, overhead etc. It also classifies costs as fixed, variable, semi-fixed and semi-variable. Examples are given of sunk costs, opportunity costs and how to identify them. The document discusses using cost analysis to evaluate decisions such as whether to sell an old machine or continue using it after repairs. Finally, it provides a case study on cost analysis to determine the most cost-effective medical scanning machine to use.
An alternative to absorption costing is marginal costing .
Under this technique only variable costs are changed as product costs and included in inventory valuation.
Fixed manufacturing costs are not allowed to products but are considered as sand thus charged directly to profit and loss account of the year.
Fixed cost also do not enter in stock valuation.
Both absorption costing an marginal costing treat on manufacturing costs
Cost-Volume-profit analysis is a technique for studying the relationship between cost, volume and profit.
The three factors of CVP analysis i.e., costs, volume and profit are interconnected and dependent on one another.
CVP analysis is an important tool of profit planning.
The reporting and analysis of a company's cost structure is done through cost accounting. A company's products, services, and any other activities that involve the company are all considered to be cost objects in the process of cost accounting.
Cost accounting is useful because it can show how much money a business makes, where it spends it, and where it loses it.
Basically it’s a documentary presentation which checks inflow and outflow of cash and cash equivalents.
A cash flow statement is a financial statement that provides aggregate data regarding all cash inflows that a company receives from its ongoing operations and external investment sources.
accounting is a specific branch of accounting involving a process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.
These transactions are summarized in the preparation of financial statements, including the balance sheet, income statement and cash flow statement, that record the company’s operating performance over a specified period.
A public company’s income statement is an example of financial accounting.
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LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
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advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
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of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
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significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
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(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
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𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
বাংলাদেশের অর্থনৈতিক সমীক্ষা ২০২৪ [Bangladesh Economic Review 2024 Bangla.pdf] কম্পিউটার , ট্যাব ও স্মার্ট ফোন ভার্সন সহ সম্পূর্ণ বাংলা ই-বুক বা pdf বই " সুচিপত্র ...বুকমার্ক মেনু 🔖 ও হাইপার লিংক মেনু 📝👆 যুক্ত ..
আমাদের সবার জন্য খুব খুব গুরুত্বপূর্ণ একটি বই ..বিসিএস, ব্যাংক, ইউনিভার্সিটি ভর্তি ও যে কোন প্রতিযোগিতা মূলক পরীক্ষার জন্য এর খুব ইম্পরট্যান্ট একটি বিষয় ...তাছাড়া বাংলাদেশের সাম্প্রতিক যে কোন ডাটা বা তথ্য এই বইতে পাবেন ...
তাই একজন নাগরিক হিসাবে এই তথ্য গুলো আপনার জানা প্রয়োজন ...।
বিসিএস ও ব্যাংক এর লিখিত পরীক্ষা ...+এছাড়া মাধ্যমিক ও উচ্চমাধ্যমিকের স্টুডেন্টদের জন্য অনেক কাজে আসবে ...
2. 1.Unit Costing
This method also called 'Single output
Costing'. This method of costing is used
for products which can be expressed in
identical quantitative units and is suitable
for products which are manufactured by
continuous manufacturing activity. Costs
are ascertained for convenient units of
output.
Examples: Brick making, mining, cement
manufacturing, dairy, flour mills etc.
3. Job Costing:
Under this method costs are ascertained
for each work order separately as each
job has its own specifications and scope.
Examples: Painting, Car repair, Decoration,
Repair of building etc.
4. Contract Costing:
Under this method costing is done for big
jobs which involves heavy expenditure
and stretches over a long period and
often it is undertaken at different sites.
Each contract is treated as a separate unit
for costing.
This is also known as Terminal Costing.
Construction of bridges, roads, buildings,
etc. comes under contract costing.
5. Batch Costing
This methods of costing is used where
the units produced in a batch are uniform
in nature and design. For the purpose of
costing each batch is treated as a job or
separate unit.
Industries like Bakery, Pharmaceuticals
etc. usually use batch costing method.
6. Operating Costing or Service
Costing:
Where the cost of operating a service such
as nursing home, Bus, railway or chartered
bus etc. this method of costing is used to
ascertain the cost of such particular service.
Each particular service is treated as separate
units in operating costing.
In the case of a Nursing Home, a unit is
treated as the cost of a bed per day and for
buses operating cost for a kilometer is
treated as a unit.
7. Process Costing:
This kind of costing is used for the products which go through
different processes.
For example, manufacturing cloths goes through different process.
Fist process is spinning. The out put of spinning is yarn. It is a
finished product which can be sold in the market to the weavers as
well as use as a raw material for weaving in the same manufacturing
unit.
For the purpose of finding out the cost of yarn, the cost of spinning
process is to be ascertained. The second step is the weaving
process.The out put of weaving process is cloth
which also can be sold as a finished product in the market. In such
case, the cost of cloth needs to be evaluated.
The third process is converting cloth in to finished product such as
shirt or trouser etc. Each process is to be evaluated separately as
the out put of each process can be treated as a finished good as
well as consumed as a raw material for the next process. In such
industries process costing is used to ascertaining the cost at each
stage of production.
8. Multiple Costing:
When the output comprises many
assembled parts or components such as
in television, motor Car or electronics
gadgets, costs have to be ascertained or
each component as well as the finished
product. Such costing may involve
different methods of costing for different
components.
Therefore this type of costing is known as
composite costing or multiple costing.
9. Uniform Costing:
This is not a separate method of costing.
This is a system of using the same
method of costing by a number of firms in
the same industry. It is treated as a
common system of using agreed
principles and standard accounting
practices in the identical firms or industry.
This helps in fixation of price of the
product and inter-firm comparisons.
10. Types of Costing
There are different types or techniques of
costings are used in cost accounting.
Different types of costing is used in
different industries to analyze and
presenting costs for the purposes of
control and managerial decisions.
The generally used types of costing are as
follows:
11. Marginal Costing:
In Marginal Costing, it allocates only
variable costs i.e. direct materials, direct
labour and other direct expenses and
variable overheads to the production.
It does not take into account the fixed
cost of production. This type of costing
emphasizes the distinction between fixed
and variable costs.
12. Absorption Costing:
The technique of absorbing fixed and
variable costs to production is called
absorption costing.
Under absorption costing full costs, i.e.
fixed and variable costs are absorbed to
the production.
13. Standard Costing:
When costs are determined in advance
on certain predetermined standards
under a given set of operating conditions,
it is called standard costing.
Standard costing is to be compared with
the actual costs periodically to analyze
the changes in the cost to revise the
standards to avoid any loss due to
outdated costing.
14. Historical costing:
When costs are determined in terms of
actual costs and not in terms of
predetermined standards cost is called
Historical costing.
In this system of cost accounting, costs
are determined only after they have been
incurred.
Almost all organizations use historical
costing system of accounting for costs.
15. Reconciliation of Cost and
Financial Accounts
Cost accounts act as a check on financial
accounts. To achieve this, we have to
compare the profit/loss ascertained under
the cost accounts with the profit/loss
arrived under financial accounts.
By preparing a reconciliation statement,
we can find out the causes of difference in
cost accounting and financial accounts.
16. Double entry system of account is being
used by large manufacturing firms and they
adopt one of the following two methods:
1. Integral or integrated Accounting:
2. Non-integral or Independent
Accounting
17. 1. Integral or integrated
Accounting:
Integral or integrated Accounting: When
cost and financial transactions are unified,
it is called the integral/integrated
accounting.
In integral or integrated accounting Cost
and financial transactions are not kept
separate, they are together recorded in
one set of books of account.
18. 2. Non-integral or Independent
Accounting.
When the cost and financial transactions
are kept separate, the method followed is
called "non-integral or Independent
Accounting".
A separate set of books are maintained
under this system. Need of reconciliation
of cost and financial accounts arises only
when non-integral accounting method is
followed.
19. Integral Accounting:
Integral Accounting: means the maintenance
of cost and financial accounts in a single set
of books. In other words the merger of
financial and cost accounting by using a single
set of books of accounts.
This serve the purpose of both financial
account and cost account. A cost ledger and
three subsidiary ledgers i.e. Stores Ledger,
Work-in-progress Ledger and Finished Stock
Ledger are also maintained in addition to the
General Ledger, Sales Bought Ledger and
Sales Ledger.
20. Preparation of Cost Sheet
Suppose you are running a factory which
manufactures electronic toys. You incur
expenses on raw material, labour and other
expenses which can be directly attributed to
cost and which cannot be directly attributed
but are incurred Upto their sales. You need to
know the composition of cost at different
stages. This will help you in the analysis of cost
of a product so that same can be used for its
proper management. In this lesson you will
learn about cost sheet and its various
components.
21. COST SHEET : MEANING AND ITS
IMPORTANCE
Cost sheet is a statement, which shows various
components of total cost of a product. It classifies
and analyses the components of cost of a
product. Previous periods data is given in the cost
sheet for comparative study. It is a statement
which shows per unit cost in addition to Total
Cost. Selling price is ascertained with the help of
cost sheet. The details of total cost presented in
the form of a statement is termed as Cost sheet.
Cost sheet is prepared on the basis of :
1. Historical Cost 2. Estimated Cost
22. Historical Cost
Historical Cost sheet is prepared on the basis of actual cost
incurred.A statement of cost prepared after incurring the
actual cost is called Historical Cost Sheet.
Estimated Cost
Estimated cost sheet is prepared on the basis of estimated
cost.The statement prepared before the commencement of
production is called estimated cost sheet. Such cost sheet is
useful in quoting the tender price of a job or a contract.
23. Importance of Cost Sheet
The importance of cost sheet is as follows:
ś Cost ascertainment: The main objective of the cost sheet is to
ascertain the cost of a product. Cost sheet helps in ascertainment of
cost for the purpose of determining cost after they are incurred. It
also helps to ascertain the actual cost or estimated cost of a Job.
Fixation of selling price: To fix the selling price of a product or
service, it is essential to prepare the cost sheet. It helps in fixing
selling price of a product or service by providing detailed information
of the cost.
Help in cost control: For controlling the cost of a product it is
necessary for every manufacturing unit to prepare a cost sheet.
Estimated cost sheet helps in the control of material cost, labour cost
and overheads cost at every point of production.
Facilitates managerial decisions: It helps in taking important
decisions by the management such as: whether to produce or buy a
component,what prices of goods are to be quoted in the tender,
whether to retain or replace an existing machine etc.
24.
Preparation of Cost Sheet
Questions - 1
From the following information, prepare a cost sheet for period ended on 31st March
2013.
Opening stock of raw material 12,500
Purchases of raw material 1,36,000
Closing stock of raw material 8,500
Direct wages 54,000
Direct expenses 12,000
Factory overheads 100% of direct w
Office and administrative overheads 20% of works co
Selling and distribution overheads 26,000
28. Fill in the BLANKS
(i) Cost sheet classifies and analyses the ----------
of cost of a product.
(ii) ............... is ascertained with the help of cost
sheet.
(iii) ............... Cost sheet is prepared on the
basis of actual cost
incurred.
(iv) Cost sheet also helps to ascertain the actual cost
or …….of a job.
(v) Cost sheet helps in fixing ...............of products
or services by providing detailed cost information.
(vi) ............... cost sheet helps in the control of
material cost of a product/service.
30. Need for reconciliation of Cost
and Financial Accounts.
When financial and cost accounts are maintained
independently many a times the profit or loss
disclosed by the two sets of books may differ
from each other.
This difference in profit/loss necessitates the
preparation of a reconciliation statement. This
statement will show the reason for the difference
in figures in the two accounts i.e. cost account
and financial account.
It not only helps in checking the arithmetical
accuracy of operating results shown by the
financial accounts but also establish the accuracy
of cost accounts.
31. Need for reconciliation of Cost
and Financial Accounts.
Limitations and techniques of Cost accounting
management
Cost Accounting is not an exact science like other branches
of accounting but is an art which has developed through
theories and accounting practices based on common sense
and reasoning....
Methods of Costing andTypes of Costing
As per the nature and peculiarities of the business, different
Industries follow different methods to find out the cost of
their product.There are different principles and procedure
for doing the costing....
Costing and Cost Accounting
Costing or cost accounting is a branch of accounting which
deals with recording classifying and appropriate allocation of
expenditure to determine the cost of product and services.
After determining the cost one can fix the profit margin...