E marginal costing the method of ascertaining

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e) Marginal Costing: The method of ascertaining marginal cost by differentiating between fixed and variable costs. This technique is used to ascertain effect of changes in volume or type of output over the profits. f) Standard Costing: The preparation of standard costs and applying them to measure the variations from actual cost and analyzing the causes of variations with a view to maintain maximum efficiency in production is known as standard costing. g) Activity Based Costing: ABC is a system that focuses on activities as fundamental cost objects and utilizes the cost of these activities as building blocks or compiling the costs of other cost objects. 22.4 REVISION POINTS 1. Essentials of good costing system are as follows suitability, specially designed system, support of executives, cost of the system, clearly defined cost center, controllable costs. 2. Cost unit is a unit of quantity of product, service or time in relation to which costs may be ascertained or expressed 3. Cost centre means “a location, person or item of equipment (or group of these) for which costs may be ascertained and used for the purpose of cost control 4. A profit centre is that segment of activity of a business which is responsible for both revenue and expenses and discloses the profit of a particular segment of activity
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301 5. The methods of costing are as follows Job costing, Batch Costing, Contract Costing, Single Costing, Process Costing, Operating Costing, Multiple Costing 6. Techniques of costing are usually used for Uniform costing, Historical Costing, Direct costing, Absorption costing, Marginal Costing, Standard operating costing, ABC costing. 22.5 IN TEXT QUESTIONS 1. Define cost units 2. Define profit centre 3. Define profit centre 4. Define Job Costing 5. Define Process Costing 6. Define Uniform Costing 22.6 SUMMARY Essentials of good costing system are as follows suitability, specially designed system, support of executives, cost of the system, clearly defined cost center, controllable costs. cost unit is a unit of quantity of product, service or time in relation to which costs may be ascertained or expressed. cost centre means “a location, person or item of equipment (or group of these) for which costs may be ascertained and used for the purpose of cost control. A profit centre is that segment of activity of a business which is responsible for both revenue and expenses and discloses the profit of a particular segment of activity. The advantages of cost accounting are cost object analysis, discovers causes, trend analysis, modeling, acquisitions’, project billings, budget compliance, capacity, inventory valuation. Some of the methods of costing are Job Costing is the system the cost of each job is ascertained separately which is suitable in all cases where work is undertaken on receiving a customer’s order. Batch Costing represents a number of small orders passed through the factory in batch. Job Costing is the system the cost of each job is ascertained separately which is suitable in all cases where work is undertaken on receiving a customer’s order. Like a printing press, motor work shop etc.
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