Cost Accounting

Classification of cost

 Costing can be calssified based on: By nature or elements (materials, labour and overheads) By time (historical, pre-determined) By traceability to the product (direct, indirect) By association with the product (product, period) By changes in activity or volume (fixed, variable, semi-variable) By function (manufacturing, administrative, selling, research           and development, Read more…

By Anagha Sanil, ago
Cost Accounting

Utility of cost accounting

 A properly installed cost accounting system will help the management in the following ways: The analysis of profitability of individual products, services or jobs. The analysis of profitability of different departments or operations. It locates differences between actual results and expected results. It will assist in setting the prices so Read more…

By Anagha Sanil, ago
Cost Accounting

Cost Accounting

Cost Accounting was basically a 20th-century creation, to make up the deficiencies of financial accounts. Cost accounting accounts for the costs of a product, a service or an operation. It is concerned with the actual costs incurred and the estimation of future costs. Cost accounting is a procedure whereby costs Read more…

By Anagha Sanil, ago
Finance

Advantages And Limitations Of Break-Even Analysis

Break-even Charts help in: Determining total cost, variable cost and fixed cost at a given level of activity. Finding out break-even output or sales. Understanding the cost, volume, profit relationship. Making inter-firm comparisons. Forcasting profits. Selecting the best product mix. Enforcing cost control. On the negative side, break-even analysis suffers Read more…

By Anagha Sanil, ago
Cost Accounting

Profit Volume Graph

 This graph (called profit graph) gives a pictorial representation of cost-volume profit relationship. In this graph X axis represents sales. However, the sales line bisects the graph horizontally to form two areas. The ordinate above the zero sales line, shows the profit area, and the ordinate below the zero sales Read more…

By Anagha Sanil, ago
Cost Accounting

Cash Break-Even Chart

 This chart is prepared to show the cash need of a concern. Fixed expenses are to be classified as those involving cash payments and those not involving cash payments like depreciation. As the cash break-even chart is designed to include only actual payments and not expenses incurred, any time lag Read more…

By Anagha Sanil, ago