Costs are classified in ABC Analysis into 5 categories: (1) Unit level cost: incurred/essential for each and every unit of output/service. (2) Batch level cost: costs related to a batch. E.g. Material inspection and handling, production set-up. (3) Product level cost: special mould for a particular product. E.g. Cake....
What are the Techniques of Costing?
Techniques of Costing: In each of the costing methods, the following techniques may be used to ascertain costs: (1) Absorption Costing: In this case both fixed and variable costs are allotted to cost units. (2) Standard Costing: It uses standard costs and standard revenues for the purpose of control...
What are the Advantages of Cost Accounting?
NEED / IMPORTANCE / ADVANTAGES OF COST ACCOUNTING: (1) Determination of total cost: Cost accounting helps to account for all the costs incurred in manufacturing a product or providing a service. (2) To Fix Selling Price: Cost accounting helps to fix the selling price for a product / service...
What are the Objectives of Cost Accounting?
OBJECTIVES OF COST ACCOUNTING : (1) Ascertainment of cost (2) Determination of selling price (3) Cost control and cost reduction (4) Ascertaining the profit of each activity. (5) Assisting management in decision making. (6) To frame various budgets.
What are the Objectives of Cost?
COST OBJECT / OBJECTIVE OF COST: The objective of cost are as follows: (1) Determination of Total Cost: To determine the total cost of manufacturing a product or providing a service. (2) Helps to fix selling price: On knowing the total cost, a manufacturer will be able to add...
What is the nature/features/characteristics of Cost?
NATURE / FEATURES / CHARACTERISTICS OF COST: (1) Cost is an expense incurred, actual or notional. (2) Cost may be notional costs also. A notional cost is a cost which is taken into consideration, Example Depreciation on Fixed Assets, but which is actually not paid to anyone. (3) A...
What is Cost Accounting?
Cost Accounting: The current official terminology of the Chartered Institute of Management Accountants of England (formerly known as Institute of Cost and Management Accountants of England) defines cost accounting as, “that part of management accounting which establishes budgets and standard costs and actual costs of operations, processes, departments or...
What is Cost?
Cost : The Terminology of Management Accounting (CIMA) has defined cost as the amount of expenditure (actual or notional) incurred on, or attributable to, a specified thing or activity. Cost is the amount of expenditure incurred on a specified thing or activity. Costing means classifying, recording and appropriate allocation...
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