Page 95 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers Manpreet Kaur, Lovely Professional University

Notes Unit 5: Basic Cost Concepts

CONTENTS
Objectives
Introduction
5.1 Meaning of Cost Accounting
5.2 Preparation of Cost Sheet
5.2.1 Direct Cost Classification

5.2.2 Indirect Cost Classification
5.2.3 Stock of Raw Materials
5.2.4 Stock of Semi-finished Goods
5.2.5 Stock of Finished Goods
5.3 Elements of Cost
5.4 Classification of Cost
5.4.1 General Classification
5.4.2 Technical Classification
5.5 Cost Ascertainment
5.6 Summary
5.7 Keywords
5.8 Self Assessment
5.9 Review Questions

5.10 Further Readings
Objectives

After studying this unit, you will be able to:
Prepare cost sheet
Identify the elements of cost
Make classification of cost

Define cost ascertainment

Introduction

Cost accounting is the classification, recording and appropriate allocation of expenditure for the
determination of the products or services, and for the suitable presentation of data for the
purpose of control and management. The cost accounting normally includes the cost of job or
contract, batch, process and so on. It normally illustrates the following compartments of the cost
aspect of the organisation viz. production, administration, selling and distribution. The cost
accounting not only reveals the amount of costs, which are relevant with the product or service,
but also establishes the ways and means to control through budgets and standard cost in order
to maintain the profitability of the firm.

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