Managerial

accounting/cost
accounting

Junaid Ali
Lecture 01
BBA II
 DEFINITION.

The accumulation and analysis

of cost information for Internal
use to assist management in
Planning, control and decision
making.
 FINANCIAL ACCOUNTING.

• It is branch of accounting which is concerned primally

financial reports for external use.
 FEATURES OF COST ACCOUNTING.

• It is special branch of the accountancy which dealing with

ascertaining the cost of products and services.
• Cost accounting is both Science as well as Art.
• It involves the process of accumulation, classification,
analysis, recording and ascertaining of the costs.
• It determine total as well as per unit cost of the product and
services.
• It provides the data for fixing the price of product and service.
• Provide data for forwarding planning & decision
making process.
 COSTING METHODS
• Single costing or unit costing.

• Process costing.

• Job costing .

• Contract costing.

• Batch Costing.
COSTING METHODS.

• Operating costing.

• Operation costing.

• Multiple or composite costing.

• Departmental costing
COMPONENTS OF COSTING
• Prime Cost= it is aggregate of all direct costs,
as direct labor, material and expenses.
• Prime cost is also known as Flat Cost.

• Factory cost: Prime cost plus Factory overhead,

(or work over head).is called factory costs. It
include all indirect expenses.
• It is also called “Work cost, Production Cost or
Manufacturing cost”
 COMPONENT….ACCORDING TO T.R
SIKKA
• Prime Cost= D.M+ D.L+ D.Exp.
• Factory or work cost= Prime cost+ Factory overhead.
• Production Cost= Factory Cost+ administration Overhead.
• Total Cost= Production Cost+ Selling & Distribution overhead.
ACCORDING TO THE POLIMINI

• Prime Cost= Direct Material+ Direct Labor.

• Conversion Cost= Direct Labor+ Factory
Overhead.
CONTINUE

Office cost:
factory cost plus office and administrative
head is known as office cost.
It is also known as gross cost or cost of
production.
Total cost:
total cost is made up of Cost of production
plus selling and distribution overhead or it
include all the element of cost until goods
sellout . This cost is also known as “selling
cost or cost of sale”.