COST &

MANAGEMENT ACCOUNTING

BOOKS:

COST MANAGEMENT:- JAWAHAR LAL COST MANAGEMENT:- RAVI K.

KISHORE

Session Schedule

Total Session: 12 Sessions Total marks: 100 marks Written Examination: 60 marks Internal Assessment: 40 marks

Test – 10 marks Presentations - 20 Marks Participation/ Attendance-10 marks

COST

Cost is the amount of expenditure incurred on or attributable to a given thing.

Fixed Cost Variable cost

ELEMENTS OF COST

DIRECT COST DIRECT MATERIAL DIRECT LABOUR DIRECT EXPENSES

INDIRECT COST (OVERHEADS) INDIRECT MATERIAL INDIRECT LABOUR INDIRECT EXPENSES

FUNCTIONAL CLASSIFICATION

PRIME COST FACTORY COST COST OF SALES TOTAL COST OF PRODUCTION

COST FOR DECISION MAKING

OPPORTUNITY COST- An opportunity cost is the benefit given up or sacrificed when one alternative is chosen over another. They are not recorded in the accounting system as they are not based on the past payment or commitments to pay in future.

SUNK COST: A cost that has already been incurred. It is a past or committed cost which is gone for forever. It’s a historical cost.

RELEVANT COST: Cost which differs between alternatives. Cost which may also be defined as the costs which are affected and changed by the decision.

DIFFRENTIAL COST: It is the difference in total cost between any

two alternatives. It is the only difference in amount of two cost.

SHUT DOWN COST: Cost which have to be incurred under all situations in the case of stopping manufacture of a product or closing down a department or a division.

CONTROLLABLE &NON CONTROLLABLE COST: A cost which can be influenced by the action of a specified member of an undertaking ( Controllable cost) A cost which cannot be influenced by the action of a specified member of an undertaking ( Non controllable)

MARGINAL COSTING

According to Institute of Cost &Management Accountants London

Marginal Cost represents “the amount of any given volume of

output by which aggregate costs are changed if the volume of output is

increased by one unit”

For example:

Cost of production of 1000 units =Rs.200,000

Cost of production for 1001 units=Rs.200,150

difference= Rs. 150 (Marginal Cost)

Decipher this one:

7 I of I Hint There are also seven books in the

set.

Answer 7 Incarnations of Immortality

Every now and then you cut my headYet I don't complain but obey instead

I am a way for your thoughts and feelings to be spreadDespite the fact that I am totally dead

A double edged weapon that is easily leadSo don't always believe me: use your head

Answer The pencil.

Cut my head: by sharpeningObey instead: write whatever you wantWay for your thoughts and feelings to be spread: by expressing them through writing

Can you decipher this phrase?

ch poorri

 

Hint Think Robin Hood.

Answer Take from the rich and give to the

poor.

What phrase is shown below?

The Hamburgler Horse RustlersBonnie & Clyde Honor Ali BabaThe Great Train Robbers Billy the Kid

Answer Honour amongst thieves