Courses

Course Description

Costing – terminology
Costing relates to the determination of cost of a product manufactured or service rendered. In order to
ascertain cost, it involves system, methods and techniques of accumulation, classification and analysis
of cost.
Cost Accounting: – “The process of accounting for cost from the point at which expenditure is incurred
or committed to the establishment of its ultimate relationship with cost centres and cost units.
The term ‘cost Accountancy’ includes (i) Costing and (ii) Cost Accounting. Its purposes are (i) costcontrol,
and (ii) profitability-ascertainment and serves as an essential tool of the management for
decision-making.
Cost Centre
Cost Centre is defined as “a location or person or place or machine or item of equipment or thing for
which cost can be ascertained and used for the purpose of cost control.” Cost centre can be classified as:
1. Process cost centre is one in which a specific process or a continuous sequence of operations is
carried out on a regular basis.
2. Production cost centre is one in which production activity is carried where the shape of raw
material is converted into a finished product.
3. Service cost centre are those which render services to the other cost centres. For examples a
maintenance & repair department, store department etc.
4. Impersonal cost centre is one which consists of a location or item of equipment (or group of
these).
5. Personal cost centre is one which consists of a person or group of persons.
6. Operation cost centre is one which consists of those machines and/or persons carrying out
similar operations.
Profit Centre
It means a centre responsible for adopting ways and avenues to earn maximum possible profit on a
product or any other activity of business, by making market surveys, suggests localities for publicity,
helps to formulate sales policies and suggests to add more values to the product at the same or cheaper
costs.
Cost Unit
Cost unit may be defined as “a quantitative unit of product or service in relation to which costs are
ascertained.”
NATURE AND CHARACTERISTICS OF COST ACCOUNTING
1. Cost accounting is a special branch of accounting having its own specific significance based on
double entry system.
2. It ascertains cost of products and services through the process of accumulation, classification,
analysis and recording.
3. It determines the cost of incomplete work or job.
4. The extensive use of this system involves application of statistical data, control methods &
techniques and determining profitability.
5. This system provides measures for control and guidance for various levels of management.
6. Helpful in decision making process

SYLLABUS

Unit-I Cost: Meaning, Concept and Classification. Elements of Cost,
Nature & Importance, Material Costing. Methods of Valuation of
Material issue. Concept and material control and its techniques.
Labour Costing, Methods of Wages payments.
Unit- II Unit Costing, Preparation of Cost Sheet and Statement of Cost
(Including calculation of tender price) Overhead costing,
(Including calculation of machine hour rate.)
Unit – III Contract and Job costing, operating costing.
Unit – IV Process Costing (Including Inter process profit and Reserve).
Reconciliation of Cost and Financial Accounts.
Unit – V Marginal Costing- Profit – Volume Ratio, Break – Even Point,
Margin of Safety, Application of Break-even Analysis.Cost Audit –
Meaning, Importance and Techniques of Cost Audit, Cost Audit
Programme.
CLASS:-B.Com. IV Semester SUBJECT: – Cost Acco