Cost Accounting For CA Students
Cost Accounting For CA Students
Cost Accounting For CA Students
BASIC CONCEPTS
SYNOPSIS :
1. Cost Accountancy
2. Cost Accounting
6.1 Cost
6.2 Pre-determined Cost
6.3 Standard Cost
6.4 Estimated Cost
6.5 Marginal Cost
6.6 Differential Cost
6.7 Discretionary Cost
6.8 Decision Driven Cost
6.9 Managed / Policy Cost
6.10 Postponable Cost
6.11 Imputed / Notional Cost
6.12 Inventoriable / Product Cost
6.13 Opportunity Cost
6.14 Out-of-pocket Cost
6.15 Joint Cost
6.16 Period Cost
6.17 Sunk Cost
6.18 Committed Cost
6.19 Shut down Cost
6.20 Relevant Cost
6.21 Replacement Cost
6.22 Absolute Cost
6.23 Cost Centre
6.24 Cost Unit
6.25 Cost Allocation
6.26 Cost Apportionment
6.27 Cost Absorption
6.28 Responsibility Centre
7. Elements of Costs
8. Classification of Costs
8.1 By Nature
8.2 By Behaviour
8.3 By Element
8.4 By Function
8.5 By Controllability
8.6 By Normality
8.7 By Time When Computed
1. COST ACCOUNTANCY
[May'94]
(v) Budgeting :
i. Expen
ii. Cost Sheet giving details as to component wise
break-up of each element of cost as compared with
previous year’s data, competitors data.
iii. Material Consumption Statement, showing total
quantity and types of material issued and used,
wastage’s if any. Comparison of actual v/s standard.
iv. Labour Utilization statement showing total
number of hours, budgeted & actually worked, types
of labour utilised, idle time etc.
v. Labour Turnover , cost of recruitment and training
of new employees.
vi. Overheads Statement giving break-up of various
types of overheads, the actual overheads incurred as
against the budgeted and the over/under absorption,
if any
vii. Sales Statement giving product wise break-up of
unit realisation, volume achieved as against the
targets.
viii. Inventory Analysis Sheet giving break-up of
inventories into materials, work-in-progress and
finished goods, their number of months holding as
against the normal holding period in the industry.
ix. Statement of Abnormal wastages / losses /
spoilages
x. ses incurred on research and development as
compared with the budget.
xi. Any other report pertaining to any cost centre
(explained later).
[May'96, Nov'99]
Decision-making
a. Formulating strategy
b. Planning and controlling activities
c. Decision making
d. Optimising the use of resources
e. Disclosure to shareholders and others external to the
entity
f. Disclosure to employees
g. Safeguarding assets".
a. Difference in computation
b. Difference in emphasis
c. Difference in use
d. Difference in records
e. Difference in applicability
Types -
7.3 Expenses :
7.4 Overheads :
8. CLASSIFICATION OF COST
Refer 7 above.
[May'94, Nov'97]
Scope
Variability
Both fixed and variable costs are Only variable costs are
considered. considered.
Definition
Cannot be precisely defined except in terms Can be defined as prime cost plus
of increase or decrease in total costs. variable overheads.
Applicability
Applicable to both, long term as well as Applicable only to short term decision
short term decision making. making.
i. Toy making
ii. Cement
iii. Radio
iv. Bicycle
v. Ship building
vi. Hospital. (3 marks)
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Material
Introduction :-
If the cost of the Investment is given then such cost also will
be part of CS
A]
B]
C]
1]
2]
7] Danger Level :-
This Chapter deals with Calculation of wages under Piece rate system
& Time rate system. It is also covers Labour Turnover; it's impact on
profit & additional coverage will be General problem relating to labour
calculation.
PART I
PART II
Difference Between Std time & Actual Time , It represent Time Saved.
PART III
Mixed Approach :-
Labour Turnover
It represent worker leaving the Job & New worker's Appointed. Labour
Turnover is essential for removal of inefficient worker & appointing of
the new efficient workers. However high rate of turnover will result into
loss of production, loss of sales, loss of profit & other administrative
cost relating to selections, recruitment, training, etc of new workers.
Following method are available for calculation of labour turnover.
OVERHEADS
This chapter deals with detail analysis of Factory overhead, the Basis
coverage is as under :-
[1] Distribution of Service Department Overheads to Production
Department
E.g :
100000 100000
METHO
ACTUAL LABOUR HOUR WORK X STD RATE LABOUR HOUR
DI
[2]
[3]
[4]
APPROACH
Amount will be carried forward to Next Year
I
APPROACH
Amount will be transferred to Costing P/L A/c.
II
APPROACH Nullify the Over and Under Absorption Situation by revising std rate of
III absorption.
Expenses of the Machine & Productive Hours of Machine, both should be calculated for
the period operation.
2] Integrated Approach
It is pure costing approach in which Person A/c & Real A/c's are
ignored. In order to complete Double effects, Artificial Account is
prepare " General ledger Adjustment Account"
In this approach those item are ignored which are not considered in
cost sheet .
Flow of Transaction :-
Integrated Approach :-
JOB COSTING
[2] Calculate per unit cost of direct material, Direct labour, Direct
Expenses and Selling & Distribution Overheads. Any Increase or
Decrease will be adjusted to such per unit cost. The Revise per unit
cost will be multiplied by Quantity of the Job order and we will get
respective cost per job cost sheet.
[4] Apply this % on Direct Labour of Job cost sheet & we will get
Factory overheads for Job cost sheet.
[5] Normally in Job Cost Sheet there will be no opening and closing
WIP & Finished Goods. Even sale of scrape will not be taken place.
BATCH COSTING:-
We have to prepare cost sheet for particular Batch size. The Overall
amount of fixed cost will not change according to Batch size but per
unit fixed cost will be change according to Batch size.
OPERATING COSTING
Introduction
These Chapter deals with Calculation of Cost for Service Orientated
Organisation.
Fixed Cost are those Cost which change according to time Factor &
doesn't have any relation with the quantity involves.
Process Costing
Introduction
Process Account
1] Normal Loss :-
3]
4] Abnormal Loss :-
To Process Account xx
5] Abnormal Gain
EQUIVALENT PRODUCTION
Introduction
The opening WIP will be completed 1st & then fresh input will be
completed , due to this Closing is available out of fresh Input.
Following steps will be followed as working Note.
(QTY)
Fact.
Particulars Material Labour
Overheads
Opening WIP completed in current
xx xx xx
period (Apply Balance %)
Output from current Input (Always
xx xx xx
100%)
Closing WIP completed in current
xx xx xx
period (Apply % Given)
Abnormal Loss (If scrape
completion % is given then apply xx xx xx
that % otherwise 100%)
(-) Abnormal Gain (always 100%) xx xx xx
Equivalent Quantity xx xx xx
Factory
Material Labour
Overheads
Rs. Rs. Rs.
Cost incurred in Current Period xx xx xx
(-) Sale of Scrape xx xx xx
Net Cost xx xx xx
/
Equivalent Qty xx xx xx
Equivalent C.P.U x x x
xx
xx
CHAPTER 17
COST AUDIT & COST ACCOUNTING RECORD RULES
SYNOPSIS :
1. Cost Audit
2.1 Introduction
2.2 Accounting Records to be Maintained
2.3 Industries Covered
1. COST AUDIT
[May'92]
i. Protective Objectives
(i) General
a. Questionnaires
b. Vouching
c. Test checking
d. Checking and ticking
To The Management
To The Government
To the Society
(iii) Labour
(v) Inventory
[May'99]
2.1 Introduction :
(ii) Labour
(iii) Overheads
(vii) Interest
(xi) Work-in-progress
(i) Cement
(ii) Cycles
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Reconciliation of Costing and
Finance
Introduction :-
STATEMENT OF RECONCILIATION
Profit as Per xx
Cost Books
Add:- 1) xx
2) xx
3) xx xx
xx
Less :- 1) xx
2) xx
3) xx xx
Profit as Per
xx
finance Books
Cost Sheet :-
Note :-
[1] Interest paid on loan Dividend Paid , Bank charges Etc are
Financial Exp not considered in Cost Sheet.
[2] In the absence of any instruction Cash Discount and Bad Debts
are taken as selling Exp. Alternatively if they are taken as Finance Exp,
they will not taken in Cost Sheet.
CHAPTER 16
UNIFORM COSTING & INTER-FIRM COMPARISON
SYNOPSIS :
1. Uniform Costing
2.Inter-firm Comparison
1.UNIFORM COSTING
[May'92,May'9
]
[May'98]
2. INTER-FIRM COMPARISON
[May'96]
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