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Cost_Accounting_Standard_10_-_Direct_Expenses - Cost...

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Cost Accounting Standards Board of ICWAI Page 1 of 6 (CAS-10) COST ACCOUNTING STANDARD ON DIRECT EXPENSES The following is the COST ACCOUNTING STANDARD – 10 (CAS-10) issued by the Council of The Institute of Cost and Works Accountants of India on “DIRECT EXPENSES”, for comments. In this Standard, the standard portions have been set in bold italic type. This standard should be read in the context of the background material which has been set in normal type. 1. Introduction 1.1 This standard deals with the principles and methods of determining the Direct Expenses. 1.2 This standard deals with the principles and methods of classification, measurement and assignment of Direct Expenses, for determination of the cost of product or service, and the presentation and disclosure in cost statements. 2. Objective The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Direct Expenses with reasonable accuracy . 3. Scope This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Direct Expenses including those requiring attestation . 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal cost : An unusual or atypical cost whose occurrence is usually irregular and unexpected and/ or due to some abnormal situation of the production or operation. 1 1 Adapted from CAS 1 paragraph 6.5.19
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Cost Accounting Standards Board of ICWAI Page 2 of 6 4.2 Cost Object: This includes a product, service, cost centre, activity, sub-activity, project, contract, customer or distribution channel or any other unit in relation to which costs are ascertained. 2 4.3 Direct Employee Cost: The cost of employees which can be attributed to a cost object in an economically feasible way. 3 4.4 Direct Expenses: Expenses relating to manufacture of a product or rendering a service, which can be identified or linked with the cost object other than direct material cost and direct employee cost 4 . Examples of Direct Expenses are royalties charged on production, job charges, hire charges for use of specific equipment for a specific job, cost of special designs or drawings for a job, software services specifically required for a job, travelling Expenses for a specific job.
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