Costing system
- 2. Cost Accounting is the process begins with recording of income and expenditure and ends with preparation of statistical data. It is a mechanism by which cost produces ascertained and controlled. As per companies act ,1956 their are cost accounting register to it.
- 3. In 1944 the institute of cost and work accountants was registered in India as a company limited by guarantee. Its prime aim was to impart training in cost accounting through examinations. The company used to conduct examinations and award certificate to useful candidates. After independence there was a rapid industrial development in India because of new industrial policy.
- 4. Names of Industries Names of Industries Iron ingots, sheets Batteries for automobiles Bulk drugs Bearings Cements and clinker Cycles and components Cotton textiles Chemical Dyes Electronic Lamps Electric products Formulations Fertilizers Insecticides Jute goods Motor vehicles Milk Food Nylon Paper Polyster
- 5. COST ‘The amount of expenditure incurred on or attributable to a give thing’ COSTING ‘Costing is the technique and process of ascertaining cost’ COST ACCOUNTING ‘Cost accounting is a process of accounting for cost from the point at which expenditure is incurred or committed to he establishment of its ultimate relationship with cost center and cost unit’
- 6. Cost Ascertainment Cost control Cost reduction Helpful in decision making Compliance of statutory requirments
- 7. COST ACCOUNT AND MANAGEMENT 1. Cost helps in periods of trade depression and trade competition. 2. Aids in price fixation 3. Helps in estimate 4. Helps in production 5. Wastages are eliminated 6. Costing makes comparison possible 7. Provides data after profit and loss account 8. Helps in inventory control 9. Helps in cost reduction 10. Assists in increasing productivity
- 8. In field of production •Cost over material •Control over labor •Control over indirect expenses •Knowledge of non profitable activities •Helpful in planning for future production
- 9. 1.Objectives to be Achieved: The objective to be achieved should be very clear so that a thrust is given to that aspect. If the main objective is to expand production then the costing system should give more attention to production aspect, if the emphasis is to improve marketing of products then that area should be cared well. 2.Study the Product: The study of the product is very essential. The nature of the product determines the type of costing system to be used. A product requiring high costs on materials will need a costing system giving main emphasis on pricing, storing, issuing and controlling of material cost.
- 10. 3.Study the Organisation: An effort should be there to introduce the costing system in the existing organisational set up. As for as possible, the organisation should be least disturbed. It becomes, therefore, necessary to see the nature of the business and of the operations, the extent of authority and responsibility, the methods of dealing with wastages of materials, the system of wage’ payment, the sources from which the cost accountant has to derive information etc. 4.Deciding the Structure of Cost Accounts: A decision about the structure of cost accounts is the next step in the process of installing a costing system. The details of a suitable costing system should be worked out. The type of manufacturing process will determine the structure of cost accounts 5. Selecting the Cost Rates: A decision is required for the allocation of various expenses among different products. What expenses are direct and what expenses are indirect? From indirect expenses an allocation is made among factory, office and selling and distribution overheads. This division of expenses will help in determining the cost rates.
- 11. 6.Introduction of the System: The success of the costing system will depend upon its proper implementation. Its implementation will be possible with the full co-operation of employees in the organisation. There is a general human tendency to oppose new things. This can be tackled by properly explaining the system to the employees and the benefits accruing from its implementation in the future. 7.A Follow-up: A follow-up of the system is essential to make it practicable and useful. When a system is put into actual practice then its weaknesses and deficiencies may be realised. While collecting cost information from various sources there may be some difficulties in compilation of information, the data may not be sufficient; there may be delays in supplying information.
- 12. In this slide share we study about:- 1.Introduction 2. Cost acccounting in India 3.List of industries 4.Specific terms of cost accounting 5. Objectives 6.Importance 7.Pre-requisite of installing good costing system