Project Report For COST AND MANAGEMENT ACCOUNTING

Submitted By

Anish Verma

Under the Supervision of

Prof. MANISH SHARMA

Faculty of Management

Faculty of Management

Poddar Management and Technical Campus

Jaipur
Costing is the technique & process of ascertaining cost` `Explain.

The technique in costing consists of the body of principles & rules for ascertaining the cost of
product and services. The technique is dynamic and changes with change of time. The process of
costing is the day-to-day routine of ascertaining costs it is popularly known as an arithmetic process.

Finding out the breakup of the total cost from the recorded data is daily process that is why it is
called arithmetic process. In this process we are classifying the recorded costs and summarizing at
each element and total is called technique.

COST ACCOUNTING

It is defined as accounting for cost classification and analysis of expenditure as enable the total cost
of any particular unit of production to be ascertained with reasonable degree of accuracy and at the
same time to disclose exactly how such total cost is constructed.

COST ACCOUNTANCY

Cost accountancy is defined as ‘’ the application of costing and cost accounting principal methods
and technique to science and art practice of cost control and ascertainment of profitability.

OBJECTIVES OF COST ACCOUNTANCY

A. To ascertain costs under different situations using different technique and systems of costing
B. To determine selling prices under different circumstances.
C. To determine and central efficiency by setting standards for materials, Labour and overheads
D. To determine value of closing inventories for preparing financial statements of the concern.

2. Explain various costs used in decision making and explain their characteristics?
Various costs used in decision making:

1. Marginal Costing
It is aggregate of variable cost that’s prime cost plus variable overhead. Marginal cost per
unit is the change in the amount at any given volume of output by which aggregate cost
changes in the volume of output increased are decreased by one unit.

2. Differential cost
It is the change in the cost due to change in activity from one level to another.

3. Opportunity cost
It is the value of alternative foregone by adopting a particular strategy or employing
resources in specific manner. It is the return expected from one investment other than the
pleasant one.

4. Replacement cost
It is the cost of an asset in the current market for the purpose of replacement. It is used for
alter mining the optimum time of replacement of an equipment or machine.

5. Relevant cost
It is the cost which is relevant for specific purpose or situation. In context of decision making,
those cost are relevant which are pertinent the decision at hand.

6. Sunk cost
Those are historical cost which are in used that’s sunk is the past and are not relevant to the
particular decision making problem being considered.

7. Normal and abnormal cost

Normal cost is a cost that is not normally increased at a given level of output in the
conditions in which that level of output is achieved
Abnormal cost is an unusual and typical cost whose occurrence is usually irregular and
unexpected. Due to some abnormal situation of the production.

8. Uniform costing
The terms applies to the costing principles and procedure which are adopted in common by
a number of undertaking which disuse to have the benefits of a uniform system.

9. Out of pocket cost

This is the position of the cost associated with an activity that involve cash payment to other
parties, as opposed to cost are not require any cash outlay, such as depreciation and certain
allocated cost.

10. Managed cost

Managed (Programmed) cost are all opposed to engineering cost. Such items where no
accurate relationship between the amounts spent on input and the output can be
established and sometime it is difficult to measure the output.

11. Eco common cost

These are costs which are increased collectively for a number of cost centres and are
required to be suitably apportioned for determining the cost of individual cost centre

12. Controllable and non-controllable cost

Controllable cost is that cost which is subject to direct control at some level of managerial
supervision.
Non controllable cost is the cost which is not subject to control at any level of managerial
supervision

CHARACTERSTICS

1. Cost Ascertainment
The principle characteristics of cost accounting for a businessman is to have the following
information about the cost of item produced in the industry

A. Total cost of items produced in factory

B. Per unit cost of item produced in factory
C. Cost of any job conducted in the factory
D. Contribution of various expenditure, via, material, labour, and other expenses in the cost
of item.

2. Cost control

Besides the ascertainment of cost are aim of cost accounting is also to control the cost to
achieve this aim, standard cost or budgeted cost is determined before starting the
production.

3. Cost production

In the present age of competition every industry of business man has to try continuously to
reduce the cost of the product, so as to increase the sale of these products in the markets

4. Helpful in decision making

 The information collected in the cost accounting is helpful in the industrialist in taking
decision about the business is scientific war

5. Compliance of statuary requirements

Keeping cost accounts has been made compulsory by the central government for certain
companies engaged in specific industries in India. Under the companies act. Therefore, it is
necessary for such companies in maintain cost accounts as required by the law.

3. COST SHEET

 AMOUNT

  PARTICULARS  AMOUNT

 PER UNIT

RAW MATERIAL CONSUME

  96000 4
(24000*4)

ADD DIRECT LABOUR (24000*0.6) 14400 0.6

ADD OTHER DIRECT EXP - -

PRIME COST 110400 4.6

 ADD FACTORY COST 24000 1

WORK COST 134400 5.6

ADD OFFICE AND ADMINISTATION 28800 1.2

COST OF PRODUCTION 163200 6.8

ADD SELLING EXP 33120 1.38

COST OF SALE 196320 8.18

ADD PROFIT 24480 `1.02

SALE 220800 9.20

WORKING NOTE

24480 = SALE – TOTAL COST

24480 = X – 163200 + 0.15X
24480 = 0.85X -163200
0.85X = 187680
X = 220800
SALES = 220800 / 24000 = 9.20 PER UNIT
SELLING PRICE = 220800*15/10= 33120