1. Overview Of Cost Accounting
Financial Accounting
Cost Accounting
Management accounting

2. Meaning of costing and cost accounting
Costing means the techniques and processes of ascertaining cost.
Motorcar
Furniture
Mobile
The cost of manufacturing a product
Electricity
Transport
Education
The cost of providing Services

3. Cost accounting is ;
science
Practice
Art

4. Application Of Cost accounting
Wholesale and retail business
Banking and insurance company
Railway
Airways
Shipping
Road transport companies
hotel

5. Application Of Cost accounting
Hospitals
Schools, collages and university
Farming
Cinema

6. Main Objective and Function of cost accounting
Ascertainment of cost
Cost control and cost reduction
Guide to business policy
Determination of selling price

7. Other objectives
To disclose sources of wastage (Material, time, expenses)
To know the profitability of each product and department
To organise the internal audit system
To supply useful data to the management
To advice management on future expansion
Formulation and implementation of bonus plan
For future training for the employee

8. Comparison of cost accounting and Financial Accounting
Purpose
Statutory requirement
Analysis of cost and profit
Periodicity of reporting
Control Aspect

9. Comparison of cost accounting and Financial Accounting
Format of presenting information
Types of transaction recorded
Types of statements prepared

10. Cost vs. Expenses and loss
Expired cost
Expenses and loss
Shown in profit and loss a/c dr side
Unexpired cost
Shown in the balance sheet

11. Cost centre Personal cost centre( Sales Manager)
Impersonal cost centre ( Machine, department, Branch)
Production cost centre
Service cost centre

12. Cost unit for different Industry/ Business
Cement/Steel/Sugar
Tonne (MT)
Chemicals
Litre, gallon, kilograms, Tonne
Bricks
500 bricks or 1000 bricks
Soft drink
Bottle. Crate of 12 or 24 bottle
Hospital
Bed per day
Interior decorator
Each job
shoes
pair

13. Cost unit for different Industry/ Business
pencils
dozen
power MW
Transport
Kilometers
Printing press
copies
Building
Each flat
Mines
Tonne of Minerals
education
Number of student

14. Methods of costing
Methods of Costing
JOB costing
Process Costing

15. Job Costing
Factory job costing
Batch costing
Contract costing

16. Process costing
Unit Costing
Operating costing
Service costing

17. Example of job costing Printing Painting Interior decoration Contract
Batch costing

18. Example of process costing
Continuous process
Chemical works, sugar mills, shops manufacturing
Operation costing
Unit costing
Service costing ( Railway , airline , electricity)
Multiple costing

19. Total absorption costing
Technique of Costing
Standard costing
Budgetary Control
Marginal costing
Uniform costing
Total absorption costing

20. Classification of cost
Direct cost
Indirect cost
Fixed cost
Variable cost
Semi variable cost
Product cost
Period cost
Controllable cost
Uncontrollable cost

21. Classification of cost
Normal Cost
Abnormal cost
Relevant cost
Irrelevant cost
Sunk cost
Differential cost
Marginal cost
Committed cost( unavoidable in short run)
Discretionary cost (Avoidable)

22. Classification of cost
Imputed cost( interest)
Opportunity cost
Replacement cost
Out of pocket cost (pay)
Implicit cost (depreciation)
Future cost
Conversion cost

23. Element of cost Total cost Direct cost Direct material Direct labour
Indirect cost
Direct overheads
Indirect material
Indirect labour

24. Direct Material Clay in bricks Leather in shoes Steel in machines
Cloth in garments
Timber in furniture

25. Indirect Material Lubricating oil Sand paper Nuts and bolts
Small tools
Threads

26. Direct labour
Machine operator
Shoe maker
Carpenter
Weaver
Tailor

27. Indirect labour
Supervisor
Inspector
Cleaner
Clerk
Peon
Watchman

28. Direct Expenses Hire of special plant for a particular job
Travelling expenses to get particular contract
Cost of patent rights
Experimental costing
Royalty paid in mining
Cost of special drawing or design

29. Indirect Expenses Rent and rates Depreciation Lighting and power
Advertising
Insurance
Repairs

30. Prime cost
Direct Material
Direct labour
Direct Expenses
Prime cost

31. Overheads Indirect Material Indirect labour Indirect Expenses

32. Overhead Production overheads Office and administration overheads
Selling and distribution overheads

33. Production overheads
Coal, oil,grease etc, Stationary used in factory , cotton waste
Works manager salary , salary of factory office staff, salary of inspector and supervisor, wages of factory sweeper
Factory rent, depreciation on plant, repairs and maintenance of plant, Insurance of factory building

34. Office and administration overheads
Stationary used in office , postage, printing
Salary of office staff, salary of managing director and remuneration to directors
Rent of office building , legal expenses ,office lighting, telephone expenses, depreciation on office equipments

35. Selling and distribution overheads
packing material, price list, catalogues
Salary of sales manager, salary of warehouse staff, salary of drivers for delivery van
Advertising, travelling exp., showroom expenses, carriage outward, insurance of goods in transit

36. Practical difficulties in costing
Lack of support from top management
Resistance from the accounting staff
Non cooperation from working and supervisory staff
Shortage of trained staff

37. Advantages of cost accounting
Reveals profitable and unprofitable activities
Helps in cost control
Helps in decision making
Guide in fixing selling price
Helps in inventory control
Helps in formulating policies
Helps in cost reduction
Reveals idle capacity
Checks the accuracy of financial accounts
Prevents fraud and manipulation

38. Limitation of costing It is necessary It is expensive
It is inapplicable
It is a failure

39. Essential of good accounting system
Suitability
Specially designed system
Support of executives
Cost of the system
Clearly defined cost centers
Controllable cost
Integration with final accounts
Continuous education
Prompt and accurate report
Avoid unnecessary details