COMPILED BY :

SARFRAZ NAWAZ KHATRI

A.C.M.A., I.C.S.P—QUALIFIED, FPFA, M.A. (ECONOMICS), M.A. (INTERNTAIONAL RELATIONS), MSMS
IN FINANCE (SZABIST) & Ph.D. SCHOLAR (SZABIST) (MAJOR IN FINANCE) –PRESENTLY ON
DISSERTATION STAGE

ASSIGNMENT # 01

COST & MANAGERIAL ACCOUNTING

MARKS ASSIGNED: MAXIMUM 25 MARKS

Q.NO. 01 DIFFERENTIATE BETWEEN COST & FINANCIAL ACCOUNTING?

Ans) Cost Accounting refers to that branch of accounting that deals with costs incurred in the
production of units of an organization. However, financial accounting refers to the accounting concerned
with recording financial data of an organization, in order to exhibit the exact position of the business.

Cost Accounting Records both historical and pre-determined costs. Conversely, Financial Accounting
records only historical costs.

Cost Accounting aims at maintaining the cost records of an organization. Financial Accounting aims at
maintaining all the financial data of an organization.

Q.NO. 02 WHAT ARE THE ELEMENTS OF COST?

Ans) The Elements of Cost are the three types of product costs (labor, materials, and overhead) and
period costs. It could be direct cost (a cost which is directly involved in production) or indirect cost (cost
indirectly involved in I production process), they are as follows: 1. Direct Material Cost 2. Direct Wages
3. Direct or Chargeable Expenses 4. Indirect Materials 5. Indirect Labor 6. Indirect Expenses 7.
Overheads.
Q.NO. 03 WHAT IS PERIOD COST?
A period or fixed cost is any cost that cannot be capitalized into prepaid expenses, inventory, or
fixed assets. It is more closely associated with the passage of time than with a transactional event.
Since a period cost is essentially always charged to expense at once, it may more appropriately be
called a period expense. A period cost is charged to expense in the period incurred
Q.NO. 04 WHAT IS THE FUNCTION OF PRIME COST?
Prime cost is the aggregate of direct material cost, direct labor cost, and direct expenses. It is the total
direct costs, which may be fixed or variable, of manufacturing an item for sale. Prime costs play a vital
role in cost and management accounting. These costs are the crucial ingredient required to calculate the
contribution margin, determine prices, forecast sales and profits, and make decisions.

Q.NO. 05 FINSIHED GODDS INDICATE WHAT? ELUCIDATE

Finished goods are products that have completed the manufacturing process but have yet to be sold to
customers. The finished goods inventory is recorded on a company’s income statement as a short-term or
current asset,