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    Introduction To Cost Accounting

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    s.hoy.kristykate
    Cost accounting is concerned with recording, classifying, and summarizing costs to determine the costs of products and services. It provides information to management for decision making, planning, controlling, and reducing costs. Cost accounting involves ascertaining, estimating, and controlling costs, as well as determining selling prices and facilitating financial reporting. Key elements of cost include materials, labor, and expenses, which can be direct or indirect costs. Costs are also classified based on their nature, function, variability, and other attributes to help with managerial decision making.

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    Introduction To Cost Accounting

    Uploaded by

    s.hoy.kristykate
    21 views22 pages
    Cost accounting is concerned with recording, classifying, and summarizing costs to determine the costs of products and services. It provides information to management for decision making, planning, controlling, and reducing costs. Cost accounting involves ascertaining, estimating, and controlling costs, as well as determining selling prices and facilitating financial reporting. Key elements of cost include materials, labor, and expenses, which can be direct or indirect costs. Costs are also classified based on their nature, function, variability, and other attributes to help with managerial decision making.

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    Introduction to Cost Accounting

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    Cost accounting is concerned with recording, classifying, and summarizing costs to determine the costs of products and services. It provides information to management for decision making, planning, controlling, and reducing costs. Cost accounting involves ascertaining, estimating, and controlling costs, as well as determining selling prices and facilitating financial reporting. Key elements of cost include materials, labor, and expenses, which can be direct or indirect costs. Costs are also classified based on their nature, function, variability, and other attributes to help with managerial decision making.

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    © All Rights Reserved
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    Download as ppt, pdf, or txt
    21 views22 pages

    Introduction To Cost Accounting

    Uploaded by

    s.hoy.kristykate
    Cost accounting is concerned with recording, classifying, and summarizing costs to determine the costs of products and services. It provides information to management for decision making, planning, controlling, and reducing costs. Cost accounting involves ascertaining, estimating, and controlling costs, as well as determining selling prices and facilitating financial reporting. Key elements of cost include materials, labor, and expenses, which can be direct or indirect costs. Costs are also classified based on their nature, function, variability, and other attributes to help with managerial decision making.

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    Cost Accounting:

    An Introduction

    1
    COST – MEANING
    Cost means the amount of
    expenditure ( actual or notional)
    incurred on, or attributable to, a
    given thing.

    2
     Cost accounting is concerned with
    recording, classifying and summarizing
    costs for determination of costs of products
    or services, planning, controlling and
    reducing such costs and furnishing of
    information to management for decision
    making

    3
     “Cost accountancy” - the application of
    costing and cost accounting principles,
    method and techniques to the science, art
    and practice of cost control and the
    ascertainment of profitability.

    4
     Ascertainment of costs
     Estimation of costs
     Cost control
     Cost reduction
     Determining selling price
     Facilitating preparation of
    financial and other statement
     Providing basis for operating
    policy
    5
     COST: Cost means the amount of expenditure incurred on a
    particular thing.
     COSTING: Costing means the process of ascertainment of costs.
     COST ACCOUNTING: The application of cost control methods
    and the ascertainment of the profitability of activities carried out
    or planned”.
     COST CONTROL: Cost control means the control of costs by
    management. Following are the aspects or stages of cost control.
     JOB COSTING: It helps in finding out the cost of production of
    every order and thus helps in ascertaining profit or loss made out
    on its execution. The management can judge the profitability of
    each job and decide its future courses of action.
     BATCH COSTING: Batch costing production is done in batches
    and each batch consists of a number of units, the determination
    of optimum quantity to constitute an economical batch is all the
    more important.

    6
    Element of cost

    Materials Labour Expenses

    Direct Indirect Direct Indirect Direct Indirect

    7
    8
    At factory level – lubricants, oil,
    consumables, etc.

    At office level – Printing &


    stationery, Brooms, Dusters, etc.

    At selling & dist. level – Packing


    materials, printing & stationery,
    etc.

    9
    10
    At factory level – foremen’s salary,
    works manager’s salary, gate
    keeper’s salary,etc

    At office level – Accountant’s salary,


    GM’s salary, Manager’s salary, etc.

    At selling and dist.level – salesmen


    salaries, Logistics manager salary,
    etc.

    11
    12
    At factory level : factory rent, factory
    insurance, lighting, etc.

    At office level : office rent, office


    insurance, office lighting, etc.

    At sales & dist.level : advertising,


    show room expenses like rent,
    insurance, etc.

    13
    Classification On basis of :
    Nature
     Function
     Direct & indirect
     Variability
     Controllability
     Normality
     Financial accounting classification
     Time
     Planning and control
     Managerial decision making

    14
     Materials

     Labor

     Expenses

    15
     Manufacturingcosts
     Commercial costs – ADM and S&D Costs

    ON THE BASIS OF DIRECT AND


    INDIRECT
     Direct costs
     Indirect costs

    16
     Fixed costs

     Variable costs

     Semi variable costs

    17
     Controllable costs

     Uncontrollable costs

    ON THE BASIS OF NORMALITY


     Normal costs

     Abnormal costs

    18
     Capital costs

     Revenue costs

     Deferred revenue costs

    19
     Historical costs

     Pre determined costs

    ON THE BASIS OF PLANNING AND


    CONTROL:
    Budgeted costs

    Standard costs

    20
     Marginal costs
     Out of pocket costs
     Sunk costs
     Imputed costs
     Opportunity costs
     Replacement costs
     Avoidable costs
     Unavoidable costs
     Relevant and irrelevant costs
     Differential costs

    21
    Thank You

    22

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