Cost accounting: cost accounting is the process of accounting for costs it embraces the accounting procedures relating to recording of all incomes and expenditures and the preparation of periodical statements and reports with the object of ascertaining and controlling costs. This video goes over fixed, variable, mixed costs as well as the high-low method, scattergraph and leasts squares/regression analysis. (hindi) basics of cost accounting 8 lessons, 1h 38m enroll 65 basic concepts of cost accounting presented by - kajal garg classification of costs. 11 cost accounting standards 411 accounting for acquisition costs of material 412 composition and measurement of pension cost 413 adjustment and allocation of pension cost. The broader the definition of the cost object, the higher the proportion of total costs that are direct costs and the more confidence a manager has in the accuracy of the resulting cost amounts variable cost.
The fixed cost is a cost that tends to be unaffected by changes in the level of activity during a given period of time the fixed costs remain constant in total regardless of changes in volume up to a certain level of output. Cost accounting aims at computing cost of production/service in a scientific manner and facilitate cost control and cost reduction financial accounting reports the results and position of business to government, creditors, investors, and external parties. An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc) so managers can understand why costs were different from what was planned and take appropriate action to. Explain how idle time, overtime premium and fringe benefit costs are treated explain and give examples of four types of quality costs what are the major techniques used to split a mixed or semivariable cost into its variable and fixed cost components.
Classification of costs are needed for the development of cost data that are useful to management there are five major purposes or aims for which the classification of cost is done every class of costs is used to make effective decisions by the management of a company or may be used for particular purpose. Comparable to the growth in meaningful use of electronic health records from a clinical perspective, advanced cost-accounting tools and techniques, coupled with sophisticated revenue-cycle features, are becoming critical for health care organizations to remain competitive in the future. Today's accounting programs are versatile enough to handle different industries' expense classifications many online accounting programs have pre-filled templates with expense line items such as office supplies, meals, entertainment, and advertising costs.
1 define the cost pool-the collection of costs to be assigned to cost objects 2 determine the cost allocation rule- the method used to assign costs in the cost pool to cost objects 3 assign the costs in the cost pool to the cost object-any end to which a cost is assigned--product, product line, department, customer, etc. The benefits of cost accounting cannot be disputed it helps the management acquire a clearer picture of resource use within a company, by connecting the costs to the outputs. Functional cost classification the first step in implementing a cost accounting system is to identify and classify costs using a functional-based approached means that you group costs by. Introduction to cost classification this chapter looks at how coding systems can be devised and used in accounting systems the nature and types of cost classification.
Opportunity cost relevant cost sunk cost shut down cost differential cost imputed cost out-of-pocket cost marginal cost replacement cost opportunity costs the potential benefit that is given up when one alternative is selected over another. 22 types of cost classifications classification by behaviour: fixed x variable major assumptions: 1 costs are defined as variable or fixed with respect to a specific cost object. A proper classification of costs is absolutely necessary to mention the costs with cost centres usually, costs are classified according to their nature, viz, material, labour, over-head, among others.
The costs which are a part of the cost of a product rather than an expense of the period in which they are incurred are called as product costs they are included in inventory values in financial statements, such costs are treated as assets until the goods they are assigned to are sold. An overview of how to classify costs as product (to inventory) or period (expense as incurred) easy to follow discussion. Cost accounting has been defined as the process of accounting for cost from the point at which expenditure is incurred or committed to the establishment, of its ultimate relationship with cost centers and cost units. Environmental full-cost accounting (efca) is a method of cost accounting that traces direct costs and allocates indirect costs by collecting and presenting information about the possible environmental, social and economical costs and benefits or advantages - in short, about the triple bottom line - for each proposed alternative.
The costs are broadly grouped into two categories, namely, accounting cost and analytical cost, which are important for business operations and decisions these two types of costs are shown in figure-2. Proper cost classification, handled by a company's accounting system and accounting department, allows a manager to know what data makes up the product cost as opposed to material costs for repairing the production line, or how much time a maintenance man spent on a specific repair. For example, cost classification in economics might involve categories of fixed, variable, opportunity, production and sunk costs on the other hand, accounting costs can be classified as either direct or indirect for a business.