Page 44 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes 2.5 Keywords

Cost: Expense incurred at the either cost centre or service centre.

Cost Centre: The location at where the cost of the activity is ascertained.
Cost of Production: It is the combination of cost of manufacturing an article or a product and
administrative cost.
Cost of Sales: It is the entire cost of a product.

Product Centre: It is the location at where the cost is ascertained through which the product is
passed through.
Profit Centre: It is responsibility centre not only for the cost and revenues but also for profits for
the activity.

2.6 Review Questions

1. The cost accounting system is directly concerned with control of inventories, plant assets
and funds expanded on functional activities. Discuss.
2. Is there any difference between cost accounting and financial accounting?
3. How will you visualize the costs of poor product quality, rework, repair, etc.?
4. Illustrate indirect and direct expenses with the help of suitable examples.
5. Once standard costs are established, what conditions would require the standards to be
revised? Give your opinion.
6. What is cost classification? Classify it in detail.
7. Illustrate the different types of costs with suitable examples.
8. Briefly write a note on key elements of cost.

9. How will you determine the scope of cost accounting?
10. Critically evaluate the relationship between cost accounting and financial accounting.

Answers: Self Assessment

1. Cost Centre 2. process
3. production 4. False

5. True 6. period costs
7. Manufacturing costs 8. Commercial costs
9. budget

2.7 Further Readings

Books I.M. pandey, Financial Management, Vikas Publishing, New Delhi.

Khan and Jain, Management Accounting.
Nitin Balwani, Accounting & Finance for Managers, Excel Books, New Delhi.

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