INTRODUCTION

TO COST
ACCOUNTANCY

PRESENTED BY:

DIPAYAN DATTA
(2K10MKT06)
 Cost

It is the expenses(real or notional) incurred on or attributed

to a given thing.

Cost Accounting

Cost accounting is an approach to evaluating

the over all cost associated with conducting
business. It involves recording, classifying and
summarizing the cost incurred by the company
,and is a tool that help managers in taking
more effective decisions.
 Objective of Cost Accounting

•To provide requisite data to help in fixing prices of products manufactured or services
rendered.
•To present and interpret data for management planning, evaluation of performance
and control.
•To help in preparation in budget and implementation of budgetary control.

Advantages of Cost Accounting

•Helps the business in measuring its efficiency.

•To provide information on which estimation and tenders are based.
•Guides the future production polices.
•Disclosing profitability and unprofitability activities.
 Difference between cost accounting & Financial accounting

Cost Accounting Financial Accounting

•Provide cost info to •Give the information on the

management. profitability of a company.

•It is voluntary, except in certain •This accounts are prepared

in certain industries. according to legal requirement.

•Cost reporting is a continuous •They are prepared on a

issue. periodically generally on a annual
basis.
•It provides a detailed system of
control. •Emphasis is on recording of
financial transaction.
 Elements of cost

Cost is calculated on the basis of the items where it is incurred such as

materials, labour and other expenses. The cost incurred could be direct
or indirect.

Classification
k of Cost

Nature
Function
Direct & indirect
Variability
Controllability
Normality
 Advanced cost Sheet

OPENING STOCK OF RAW MATERIALS

+PURCHASES
+CARRIAGE INWARDS
-CLOSING STOCK OF RAW MATERIALS
 
VALUE OF MATERIALS CONSUMED
+DIRECT WAGES
+DIRECT EXPENSES
 
PRIME COST
+FACTORY OVERHEADS
+OPENING STOCK OF WIP
-CLOSING STOCK OF WIP
 
Contd.
 FACTORY COST
 
+ADMINISTRATIVE OVERHEADS
 
COST OF PRODUCTION
+OPENING STOCK OF FINISHED GOODS
-CLOSING STOCK OF FINISHED GOODS
 
COST OF GOODS SOLD
+SELL. & DIST. OVERHEADS
 
COST OF SALES
+PROFIT
 
SALES
THANK YOU