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Teena Shivnani
Cost
The amount of Expenditure incurred on or
attributable to a given thing.
Cost Cost
Cost
Costing Control Audit
Accounting
Example:-
IM = oil, lubricants etc.
IL = gate keeper salary, store keeper etc.
IE = factory rent, factory insurance, factory lighting
etc.
Prime cost
+ Works or Factory cost
Works overhead
Works cost
+ Cost of Production
office overhead
Cost of production
+ Cost of sale or Total cost
Selling overhead
DM PC = DM + DL + DE
DL Prime cost
DE
Conversion Cost
Factory O/h
CC = DL + DE + F o/h
April 10, 2022 Cost Accounting / Dr. Teena 32
Cont.……..
Product Cost :- these are those cost which are
necessary for production and which will not be
incurred if there is no production.
FC
Output
O X
April 10, 2022 Cost Accounting / Dr. Teena 36
Cont……………..
Variable cost :-
It is cost tend to vary in direct proportion to the
volume of output.
In other words, direct relationship between cost &
production. E.g. Direct material, labour, commission
etc…….
Total variable cost increase when quantity of
production increase & visa versa.
O Output X
Shut Down Cost:- There are the costs which will still
be incurred although a plant is shut down temporarily.
E.g. Rent, rates, depreciation, Maintenance of plant
etc.