Though there is much common ground between Financial Accounting and Cost Accounting and though in fact cost accounting is an outgrowth of financial accounting yet the emphasis differs. Firstly financial accounting is more attached to reporting the results of the business to persons other than internal management – government, creditors, Read more…
we can define cost sheet as a statement of all items that are added into cost of products or services. It is usually prepared to meet three objectives: To provide the classification of costs in a summarised form To prepare estimates of costs for future use To facilitate a comparative Read more…
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…
Costing is the technique of ascertaining costs. It determines the cost of doing something, i.e., the cost of manufacturing an article, rendering service, or performing a function. Cost Accounting is a broader term, in that it tries to determine the costs through a formal system of accounting. It, thus, includes Read more…
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…
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…
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…
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…
Break-Even Chart The break-even point can also be shown graphically through the break-even chart. The break-even chart `shows the profitability or otherwise of an undertaking at various levels of activity and as a result indicates the point at which neither profit nor loss is made’It shows the relationship between cost, Read more…
1.Difficulty in Classification: In marginal costing, costs are segregated into fixed and variable. In actual practice, this classification scheme proves to be superfluous in that, certain costs may be partly fixed and partly variable and certain other costs may have no relation to volume of output or even with the Read more…