NAME- OMPRAKASH SAH

Cost Accounting

Cost AccountingCost accounting is a process of collecting,

analyzing, summarizing and evaluating various alternative courses of action. Its goal is to

advise the management on the most appropriate course of action based on the cost

efficiency and capability. Cost accounting provides the detailed cost information that

management needs to control current operations and plan for the future.

Cost Accounting v/s Financial Accounting

Financial accounting aims at finding out results of accounting year in the form of Profit and Loss Account and Balance Sheet.

Financial accounting reports the results and position of business to government, creditors, investors, and external parties.

Cost Accounting is an internal reporting system for an organization’s own management for decision making.

In financial accounting, cost classification based on type of transactions, e.g. salaries, repairs, insurance, stores etc. In cost accounting, classification is basically on the basis of functions, activities, products, process and on internal planning and control and information needs of the organization.

Financial accounting aims at presenting ‘true and fair’ view of transactions, profit and loss for a period and Statement of financial position (Balance Sheet) on a given date. It aims at computing ‘true and fair’ view of the cost of production/services offered by the firm.

Elements of cost

Basic cost elements are:Raw materialsLaboursExpenses/overhead

1) Material (Material is a very important part of business) Direct material/Indirect material2) Labour Direct Labour/Indirect labor3)Overhead (Variable/Fixed) 1) Production or works overheads Factory Staff 2) Administration overheads Office Staff 3) Selling overheads - Catalogues, Advertising,

Exhibitions, Sales 4) Distribution overheads

5) Maintenance & Repair (Office equipment/Factory machinery)

Utilities Gas Electricity Water Rates Other Variable Expenses Salaries (Payroll - Wages, NI PAYE Pensions) Depreciation (Machinery/Office Equipment) Other Fixed Expenses

Thanks A Lot

Thanks A Lot