acct.324.cost.accounting.1.ppt - Jazan University College...

ACCT 324
By Trabelsi Slaheddine
Jazan University
College of Business Administration
فيلاكتلا ةبساحم
1
Trabelsi Slaheddine
(c) 2013

Unit 1 : Introduction to Cost Accounting
Unit 2 : Accounting for Material
Unit 3:
Machine per Hour Rate and preparation of Cost Sheet
Contents
2
Trabelsi Slaheddine
(c) 2013

UNIT – 1: Introduction To Cost
Accounting
1.
Meaning of Cost and Cost Accounting
2.
Objectives of Cost Accounting
3.
Cost Terminology
4.
Classification of Costs and Calculation of Various Cost.
5.
4. Home Assignment
3
Trabelsi Slaheddine
(c) 2013

COST - MEANING
Cost means the amount of
expenditure ( actual or notional)
incurred on, or attributable to, a
given thing.
1.
MEANINGS
4
Trabelsi Slaheddine
(c) 2013

Cost accounting is
concerned with recording,
classifying and summarizing
costs for determination of
costs of products or
services, planning,
controlling and reducing
such costs and furnishing of
information to management
COST ACCOUNTING - MEANING
5
Trabelsi Slaheddine
(c) 2013

2. OBJECTIVES OF COST
ACCOUNTING

Ascertainment of costs

Estimation of costs

Cost control

Cost reduction

Determining selling price

Facilitating preparation of
financial and other statement

Providing basis for operating
policy
6
Trabelsi Slaheddine
(c) 2013

3. COST TERMINOLOGY

COST: Cost means the amount of expenditure incurred on a
particular thing.
 COSTING: Costing means the process of ascertainment of costs.

COST ACCOUNTING: The application of cost control methods
and the ascertainment of the profitability of activities carried out
or planned”.

COST CONTROL: Cost control means the control of costs by
management. Following are the aspects or stages of cost control.

JOB COSTING: It helps in finding out the cost of production of
every order and thus helps in ascertaining profit or loss made out
on its execution. The management can judge the profitability of
each job and decide its future courses of action.

BATCH COSTING: Batch costing production is done in batches
and each batch consists of a number of units, the determination
of optimum quantity to constitute an economical batch is all the
more important.
7
Trabelsi Slaheddine
(c) 2013

ELEMENTS OF COST
Element of cost
Materials Labour Expenses
Direct Indirect
Direct Indirect Direct Indirect
8
Trabelsi Slaheddine
(c) 2013

MATERIAL
: The substance from which
the finished product is made is
known as material.
(a)
DIRECT MATERIAL :
is one which
can be directly or easily identified in
the product Eg: Timber in furniture,
Cloth in dress, etc.
(b) INDIRECT MATERIAL :
one which
cannot be easily identified in the
product.
9
Trabelsi Slaheddine
(c) 2013

EXAMPLES OF INDIRECT MATERIAL
At factory level – lubricants, oil,
consumables, etc.
At office level – Printing &
stationery, Brooms, Dusters, etc.
At selling & dist. level – Packing
materials, printing & stationery,
etc.