Poge No,
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COSTo
cost denotes the amount of moneu that is
apert o
pxoduce ox czeatea produc:
Accordinq to Cost Accounhnq Standaxd I cost is a
suTement, in monetaxs texns, of the amount of
reGDUXCes used ox the poduchon o qoodsox 7endeng
Geavices".
Costinge sdarov-Lnoe
Costing zefexs to the techaiques used fox a2 acetain mert
and contol b cost
Cost accounhng
IH maybe defined specialised branch o accounting
uhich involves classiticahion , accumulation ,assignmenf
and contol of costs
Classification b cos
Matezial costs
IBased on Noture of expense laboux costs
expenses
dizect (rauw
mateials)
Matexia costs
indirect
madeeE
laboux cost- The payment, to he employees, perma
nent oY temporay fox therr Gevices
indirecf +
Labour cost includes 9alay ox wages
dizect
CAivectu inyaved1 (anev nge benets t cash incentiye +
in prcduction basis ouextime + bonug.
ex. shoe maker wko indirecy
helpin N
Producho
ef. watchmen, cleaner,
warehouse, supeovsot
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expenses - Costs ofhex than mateiale cost ox labour
costs inyolved in an achivity
dixect indirect
teans povtahon, (light, pouoe)
patent rate) Tent
fired cost
vamable cost
2 Aased on Vamab1lity
semi-vaMable Cost
Ceatain costs change in accoxdance pith produchion level
while othex cogts emains unchanged ased
Fixed cost - These costs Temain congtant they do not
incxease ox decYe0se when volume of
rmanagema
produchon changes 4 ex Rent, Salames,
lease, Abuilding innSurance and wuages o
pezmanent ataf
Vaioble cost - Costs tend to vay in direct paopozion ta
the volume f output.
ex: Dinect mateal dizect laboux and
dizect expenses.
sermi- vo1a.ble ox semi Hxed costs - These costs include
bath Pixed and yanable component They are paxtly
fixed and paxtly vamable. A gem- vamable cost often
has a ixed element below) which it will not fallat
any level of output ex Supevisibn, maintenance
epars, light pDLD eY ete
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produchon by manufacuing
administhahon and ofice
Based on funchions selting
distaibution
Produchion ox manufacuing coat- I is the cost of all
-items involved in the production oa prnduct or
T incudes all direct costs and all indixect costs elated
to the produchon. ex: AlL dinect costs oith example o each.,
LDaxehDuses. epai X maintenanceetc.
* Indirect produchion coste s also
also known_productian
DX manutactuing oveaheade.n
COST DBJECT
measuYement ot
Any activity fox which a separate
cost is undextaken
example of cost objects -
1:e cost of a poduc
2. cost o a sexvice
cost of unning a xeqional ffice
cnct of MUnning a depatment
COST UNITS
A unit of a pDdut or sexvice in relation to ohich
costs aYe ascetained
examplei
H 0om in a hotel
2 A lite of paunt
An inpat in- patient in a hospttal
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units of pxoduchon
cost units
units oPService
cost units
simpleunits comp bste units
measuxement onls -measuYement uSing
using one unit D units
ex: Passenqex miles
ex only Kg
person Rilom ets
- 2 Simple units put
togetther
COST CENTER
and
A place whexe VaMoUS cOsts aye acumulated
Haen ascextauned oY a produt
COST SHEET
costs
I s a Gummay o all the
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Date
COST SHEET
Paaticulars Total cost Cos per
Unit
Operuna stock of vaw mateials
Add: puxchase of aw mateials
carMage inwards
Octaot
XXX XXX
Leas: cdosing gtock of aw mateials
XXX XXX
Addi Cost o dixet mateials consumed
Dixect 0r prDductve wages
Diret expenses XXX
PRIME COST
Add: wDks ox facto oVexhead
Ihdixect materials
Indizet wages
Rent and rates
InsuYance
Fatoy lighting
Supevision
woks stationany
Canteen and welfaxe expenses
Depreciation o plant and machiney
Technical dizectoXe fee
Tntenal txanspot expenses
Less : Gale of SCXap
Add i Dpenin stock of wosk-in- progess
Less: cloaing sto ck of wok -in- prbgress XXX XXX
ODRKS coST
Add: office and administxahon ovexhead
office salaxies
DixetYS tee
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Date
Ofhce aent and ates
DiCe stationay and pinthng
Depaiciation o -futuze fumituze
Subscaption to txadejouanas
Dfice lighhing
Postage
Legal chaxges
Audit fees
Repaix of ofice eauipment
COST OF PRODUCIIDN
XXX XXX
Add: Dpening cack of inished qoods
less: closing stock of finished qonds. XXX XXX
COST 0F GDODS GOLD
Add: Gelling and distibuhor Dyexheade
Advertising.
ghowoom exDenses
Rad debts
Galesmen salanes and expenGes
Packing expenses
Cariage outwaxd
CommiseIDN o Sales agents
cnst Df ataloques
Expenses.D deliveMs vans
collechon of chaYes
Tiavelling expenses
Cost op tenders
Warehause expenses
Gales managexe salanes
Sales dinectoxs fees
Sales oce expenses Vans
Depreciahion and mepaix o delivexy.
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XXX XXX
COST OF SALES OR TOTAL CosT
Add: Profit
XXXXXX
SALES
