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COST &
MANAGEMENT ACCOUNTING
BOOKS:
COST MANAGEMENT:- JAWAHAR LAL COST MANAGEMENT:- RAVI K.
KISHORE
Session Schedule
Total Session: 12 Sessions Total marks: 100 marks Written Examination: 60 marks Internal Assessment: 40 marks
Test – 10 marks Presentations - 20 Marks Participation/ Attendance-10 marks
COST
Cost is the amount of expenditure incurred on or attributable to a given thing.
Fixed Cost Variable cost
ELEMENTS OF COST
DIRECT COST DIRECT MATERIAL DIRECT LABOUR DIRECT EXPENSES
INDIRECT COST (OVERHEADS) INDIRECT MATERIAL INDIRECT LABOUR INDIRECT EXPENSES
FUNCTIONAL CLASSIFICATION
PRIME COST FACTORY COST COST OF SALES TOTAL COST OF PRODUCTION
COST FOR DECISION MAKING
OPPORTUNITY COST- An opportunity cost is the benefit given up or sacrificed when one alternative is chosen over another. They are not recorded in the accounting system as they are not based on the past payment or commitments to pay in future.
SUNK COST: A cost that has already been incurred. It is a past or committed cost which is gone for forever. It’s a historical cost.
RELEVANT COST: Cost which differs between alternatives. Cost which may also be defined as the costs which are affected and changed by the decision.
DIFFRENTIAL COST: It is the difference in total cost between any
two alternatives. It is the only difference in amount of two cost.
SHUT DOWN COST: Cost which have to be incurred under all situations in the case of stopping manufacture of a product or closing down a department or a division.
CONTROLLABLE &NON CONTROLLABLE COST: A cost which can be influenced by the action of a specified member of an undertaking ( Controllable cost) A cost which cannot be influenced by the action of a specified member of an undertaking ( Non controllable)
MARGINAL COSTING
According to Institute of Cost &Management Accountants London
Marginal Cost represents “the amount of any given volume of
output by which aggregate costs are changed if the volume of output is
increased by one unit”
For example:
Cost of production of 1000 units =Rs.200,000
Cost of production for 1001 units=Rs.200,150
difference= Rs. 150 (Marginal Cost)
Decipher this one:
7 I of I Hint There are also seven books in the
set.
Answer 7 Incarnations of Immortality
Every now and then you cut my headYet I don't complain but obey instead
I am a way for your thoughts and feelings to be spreadDespite the fact that I am totally dead
A double edged weapon that is easily leadSo don't always believe me: use your head
Answer The pencil.
Cut my head: by sharpeningObey instead: write whatever you wantWay for your thoughts and feelings to be spread: by expressing them through writing
Can you decipher this phrase?
ch poorri
Hint Think Robin Hood.
Answer Take from the rich and give to the
poor.
What phrase is shown below?
The Hamburgler Horse RustlersBonnie & Clyde Honor Ali BabaThe Great Train Robbers Billy the Kid
Answer Honour amongst thieves