A simple presentation on basic concepts of COST ACCOUNTIG

PERSENTED BY
DILEEP .S S1 MBA

Meaning of term Cost

The official terminology of Chattered Institute of Management Accounts (CIMA) London defines the term cost as the amount of expenditure incurred (actual or notional)incured or attributable to a spesic thing or activity

Definition of Cost Accounting

According to the official terminology of CIMAthe establishment of budgets standard cost and actual cost of operations .process activities or products;and the analysysof variencesprofitability or the social use of funds

Cost unit and cost centre

Cost unit :a unit of product or service in relation to which cost are ascertained. Cost centre :a product or service location, function activity or an itemof equipment for which cost are ascertained

Cost elements and clasifications

Elements of cost: the constituent parts of cost accounting to a factors up on which expenditure is incurred ,namely material ,labour ,and expenses

Direct and Indirect cost

Direct cost expenditure which can be economically identified with a specifically measured in respect to a relevant cost object. Indirect cost is expenditure on labour material for services which cannot be economically identified with a specific sailable cost unit

Production cost and its composition

Production cost: Official terminology defines production cost as prime cost plus absorbed production overhead. Prime cost: The total of direct material direct labour and direct expense

Fixed cost variable cost

Fixed cost A cost which is incurred for an accounting period, and which within a certain output turnover limit tends to be unaffected by fluctuations in the level of activity Variable cost A cost which varies with a measure of activity

Other cost concets

1. product cost period cost 2. Marketing cost 3. Selling cost 4. Distribution cost 5. Administration cost 6. Research and development cost 7. Conversion cost 8. Relevant irrelevant cost 9. Sunk cost 10. Marginal cost 11. Opportunity cost 12. Standard cost

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