COST ACCOUNTING Unit 1 DEFINITION MEANING OF COST

COST ACCOUNTING Unit -1

DEFINITION & MEANING OF COST – “ COST IS THE AMOUNT, MEASURED IN MONEY , OF CASH EXPENDED OR OTHER PROPERTY TRANSFERRED, CAPITAL STOCK ISSUED, SERVICES PERFORMED OR LIABILITY INCURRED, IN CONSIDERATION OF GOODS OR SERVICES RECEIVED OR TO BE RECEIVED” – AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS

MEANING OF COST • THE TOTAL OF ALL EXPENSES INCURRED WHETHER PAID OR OUTSTANDING, IN THE MANUFACTURE AND SALE OF THE PRODUCT

DEFINITION OF COSTING • “ COSTING IS THE PROCESS OF DETERMINING THE COST OF DOING SOMETHING THAT IS THE COST OF MANUFACTURING AN ARTICLE, RENDERING A SERVICE OR PERFORMING A FUNCTION” - STAUBUS

MEANING OF COSTING • COSTING IS THE TECHNIQUE • TECHNIQUE INCLUDES RULES , PRINCIPLES AND PROCEDURES • IT IS NOT STATIC • CHANGES FROM TIME TO TIME

COST ACCOUNTING “IT IS APPLICATION OF COSTING AND COST ACCOUNTING PRINCIPLES, METHODS AND TECHNIQUES TO THE SCIENCE, ART AND PRACTICE OF COST CONTROL AND ASCERTAINMENT OF PROFITABILITY” - ICWA

FUNCTIONS OF COST ACCOUNTING • • • TO SERVE AS A GUIDE TO PRICE FIXING OF PRODUCTS TO DISCLOSE SOURCES OF WASTAGE IN PROCESS OF PRODUCTION TO REVEAL SOURCES OF ECONOMY IN PRODUCTION PROCESS TO PROVIDE FOR AN EFFECTIVE SYSTEM OF STORES, MATERIALS ETC. TO ASCERTAIN THE PROFITABILITY OF EACH PRODUCT TO SUGGEST MANAGEMENT ON FUTURE EXPANSION POLICIES TO PRESENT AND ITERPRET DATA FOR MANAGEMENT DECISION TO ORGANISE COST REDUCTION PROGRAMMES TO FACILITATE PLANNING AND CONTROL OF BUSINESS ACTIVITY TO SUPPLY TIMELY INFORMATION OF VARIOUS DECISIONS TO ORGANISE THE INTERNAL AUTDIT SYSTEM

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