cost ascertainment[1]

8/14/2019 Cost Ascertainment[1]

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Cost Ascertainment


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Cost

Amount of Expenditure (actual or notional) incurred or attributable to a

given thing- material purchased


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Cost Object

Anything for which a measurement of cost

is desired

It could be a product, Service, Customer,

Brand, Activity, Department


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Cost Assignment

Tracing Accumulated Costs that have direct

relationship to a cost object & allocating

accumulated costs that have an indirect

relationship to a cost object

Allocation & Apportionment


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Cost Accumulation

Collection of Cost Data in some organized

way by means of an accounting system

Keeping Cost Accounts


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Cost Unit

A unit of Quantity of product, service or time

in relation to which costs may be expressed

It is unit of Measurement of Cost

Automobile -numberCloth -metreSugar -QuintalTele-call -minute/secondsPower -KW/HTransport T/KM


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Cost Centre

A Location, person ,or item of equipment or

group of these for which costs may be ascertainedand used the purpose of Cost Control

Personal or Impersonal Cost CentreProduction And Service Cost Centre

Operation and Process Cost Centre


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Components Of Total Cost

Prime Cost Total Of DMC,DLC & DE

Factory Cost orWorks Cost - Prime Cost +Factory Overheads

Office Or COP- Factory Cost +AOH

Total Cost - COP+ Selling & Distribution OH


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Prime Cost

F Cost

COPcos

D Materials

D .Labour

D. Expenses

Prime Cost F. Overhead

F Cost

A.Overhead

COP

SD overhead

cos

PROFIT

salesCost Accumulation

Prime

Cost


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Components Of Total Cost

Direct Materials+ Direct Labor+

Direct Expenses

Prime Cost+Factory Over Heads

Factory Cost

+Administration

OverheadsCOP

+SD Overheads

Prime Cost Or

Direct Cost

Factory Or Works OrManufacturing Cost

Office Cost Or

Cost Of Production

Total Cost Or

Cost Of Sales

Cost Of Sales

+Profit

Selling Price

Or Sales


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Cost Sheet

Reveals Total Cost Of Production Per Unit

Discloses Break Up Of Total Cost

Helps in Preparation Of Estimate

Helps in Fixing Sales Price

Comparison Of Costs


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Few Instructions for Preparation

Of Cost Sheet


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Particulars Total(Rs.) Per Unit(Rs.)

Opening Stock of Raw Materials

Add : Purchases

Expenses on Purchases

Less: Closing Stock of Raw Materials

Value of raw materials consumed

Director LabourDirect Expenses

Prime CostFactory Overheads :

Add OP stock OF WIP

Less Cl. Stock of WIP

Factory Cost

Office & Administration Overheads+ Opening Stock Of FG

-Cl Stock Of FG

Cost of ProductionSelling and distribution Overheads

Cost of Sales

Profit

Sales

COST SHEETName of the Company ----------------------------

Cost Sheet of (Name of the Product) -----------------

For the period ending ------------------------------

Units--


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Preparation Of Cost Sheet

1 Computation Raw Materials Consumed

2 Computation Of Value of Work In Progress

3 Computation Of Value Of Finished Materials

4 Computation Of Profit5 Estimation Of Overheads

6 Treatment Of Scrap/By Product

7 Treatment Of Shortage of FG

8 Treatment Of Subsidy


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1 Computation Of Raw Materials Consumed

Opening Stock Of Raw Materials ---------

Add Purchases Of Raw Materials ---------

Expenses On Purchase --------

------------

Less Closing Stock Of Raw Materials-----

Defective Materials Returned -----Abnormal Wastage Of RM ------

Cost Of Raw Materials Consumed




------------


Defective Materials Returned -----Abnormal Wastage Of RM ------

Cost Of Raw Materials Consumed




------------


Defective Materials Returned -----Abnormal Wastage Of RM ------ ----------

Cost Of Raw Materials Consumed ------------


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2 Computation Of Value Work In ProgressConsists of

Cost Of Materials To date

Cost Of Labor to date Factory Overheads to date

Valued At Factory Cost

Prime Cost

Add Opening Stock Of WIP

Less Closing Stock Of WIP

Factory Cost

Value At Prime Cost

Direct Materials

Direct LabourDirect Expenses

+OP Stock Of WIP

-CL Stock Of WIP

Prime Cost


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3 Computation Of Value Of Finished Materials

Cost Of Production ---

Add Opening Stock Of FG---

Less Closing Stock Of FG----

Cost Of Goods Sold


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4 Computation Of Profit

1 Profit As % of Cost( Total Cost Given)

Profit=Cost x Profit%

100

2 Profit as a percentage of Selling Price (Total Cost is given)

Profit=Cost X Profit%

100-profit%3 Profit as percentage Of Cost ( Selling Price is given)

Profit =Selling Price x Profit %

100+profit%


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6Treatment Of Scrap/By Product-

Reliable Value deducted from FOH

7 Treatment Of Shortage of FGNormal Shortage added to Cost Of Production

8 Treatment Of Subsidy

To be deducted from profit


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Items Excluded From Cost

1 Purely Financial Incomes

2 Purely Financial Charges

3 Appropriation Of Profit

4 Abnormal Expenses


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Purely Financial Incomes Interest On Investments Interest on Bank Deposits Share Transfer fee Rent Receivable Capital Profit

Dividend Received Cash Commission or Discount


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2 Purely Financial Charges

Capital LossesDamages Payable

Penalties and FinesExpenses On Transfer Of Company OfficeInterest On Bank Loan, DebenturesDiscount On Bonds etc

Losses on investmentCash Discount


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3 Appropriation Of Profit

Appropriation Of Sinking FundDividend PaidTaxes On Income & ProfitsCharitable DonationsTransfer To Reserves


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4 Abnormal Expenses & Losses

Cost Of Abnormal Wastage of MaterialsLoss by theftLoss by fireCost of Abnormal Idle TimeExceptional Bad Debts


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Factory Overhead

Operating Supplies- lubricating Oil, detergent, Welding Materials, paints,

nuts, bolts, dyes, nondurable tools

Repairs & Maintenance-gears, pulleys, belts, washers

Labour cost of Set up, Inspection, Rearranging of Machinery & Equipments

Unproductive Wages or Indirect Wages

Factory Rent

Internal Transport, Overhead CraneFactory Rates & Insurance

Power & Fuel

Salaries of Foremen ,Supervisor ,technical Directors & Staff

Wages of gateman, time keeper, factory Clerk, Tool Room Staff store keeper

Lighting & Heating Of Factory

Depreciation Of PM, Factory building, tools

Waste Disposal

Training Factory Staff

Canteen

Drawing Office Cost,

Dispensary


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Administration Overheads

Rent, Rates & Insurance of Gen OfficeLighting Heating Of OfficeOffice SalariesDepreciation of office building, furniture, equipmentsBank Charges,

Audit Fee,Counting House,Legal ExpensesOffice Telephone & Postage,Printing & StationerySuperannuationetc


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Selling & Distribution Overheads

Salaries, commission, traveling of sales StaffAdvertising,Catalogues, price listsRent & Rates,Maintenance & Insurance of Sales Office, Show RoomsSelling Department Salaries & Stationery

Bad Debts, Collection ChargesTelephones & Postage for SellingTrade DiscountMarket ResearchCarriage Out and transport Normal Wastage of finished GoodsSamples

Warehousing ExpensesPacking,Rent, Rates & Insurance Of WarehouseDep & Running Cost Of Delivery VansWages of Packers ,Van Drivers

cost ascertainment[1]

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