Page 23 - DCOM202_COST_ACCOUNTING_I

Unit 1: Nature and Scope of Cost Accounting

Conclusion Notes
As a precursor to grounded research, this article has discussed operating and accounting
issues for Mhlume Sugar Company Limited which arose during a field study. The
company has confronted and solved unique issues in product costing and pricing through
the application of activity-based costing and transfer pricing concepts.

Self Assessment

Fill in the blanks:
10. Cost accounting system involves detailed analysis of …………………
11. In any costing system ………………… is the one which directly related to the activity of the
operations.
12. The system of ………………… must provide for accuracy.
13. A basis for ………………… is being provided by both the accounting systems.
14. ………………… help management in determining future production policy.

15. Costing methods are process costing, job costing and …………………

1.9 Summary

z z Cost denominates the use of resources only in terms of monetary terms.
z z In brief, cost is nothing but total of all expenses incurred for manufacturing a product or
attributable to given thing.

z z Costs which cannot be controlled are known as uncontrollable costs.
z z All fixed costs are very difficult to control or bring down; they rigid or fixed irrespective to
the level of production.

z z A budget is detailed plan of operation for some specific future period. It is an estimate
prepared in advance of the period to which it applies.

z z It acts as a business barometer as it is complete programme of activities of the business for
the period covered.

1.10 Keywords

Centralisation: Span of control is with the top management
Cost: Expense incurred at the either cost centre or service centre
Cost of Sales: It is the entire cost of a product.

Decentralisation: process of assigning duties at lower level
Profit Analysis: Analysis of company’s gains
Traditional Way of Costing: Old methods used by cost accountants

1.11 Review Questions

1. Define cost accounting.

2. Discuss the limitations or disadvantages of cost accounting.

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