Costing Assingment a Karishma Jani

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Assignment Assessment ReportCampus: Level: Module Name: Students Name: e-mail id & Mob No Stream Mumbai ACL II Costing MIS & Budgetary Control Karishma Jani Karishmajani90@gmail.com 9619284286 Business Year/semester Assignment Type Assessors Name Reqd Submission Date Actual Submission Date Submitted to : 2010-2012 II Semester Assignment A Satish Sir 27/5/12 26/5/12 Ewlci.org

Certificate by the Student: Plagiarism is a serious College offence. Karishma Jani. I certify that this is my own work. I have referenced all relevant materials. (Students Name/Signatures) Expected Outcomes Assessment Criteria Grade based on D,M,P,R system Feedback

General ParametersClarity Analytical ThinkingResearch DoneFormatting & PresentationClear understanding of the concept Ability to analyze the problem realistically Research carried out to solve the problem Concise& clear thinking along with presentation

Subject Specific Parameters1. Understand concept of cost in relation to Industry 2. To be able to determine the cost Grades P M D Conceptual clarity

Cost Calculation accuracy Achieved Yes/No (Y / N)

Grade Descriptors A Pass grade is achieved by meeting all the requirements defined. Identify & apply strategies/techniques to find appropriate solutions Demonstrate convergent, lateral and creative thinking.

Assignment Grading Summary (To be filled by the Assessor)OVERALL ASSESSMENT GRADE: TUTORS COMMENTS ON ASSIGNMENT: SUGGESTED MAKE UP PLAN (applicable in case the student is asked to re-do the assignment) REVISED ASSESSMENT GRADE TUTORS COMMENT ON REVISED WORK (IF ANY) Date: Assessors Name / Signatures:

Assignment A 1. Costing Accounting is a system of foresight and not a post-mortem examination. Discuss the statement and explain how cost accounting serves as a tool of control in the hands of management. Give suitable illustrations to support your reasoning. 2. Given below is the list of industries. Give a brief explanation about the industry and the cost components of the industry. Also give a method of costing and unit of cost against each industry. Hotel Industry Transportation Industry Banking Industry Insurance Industry Airline Industry Courier Industry Advertising Health Care Industry Real Estate Industry Hospitals

3. A manufacturing company has shown Rs.32380 as Establishment Expenses which include the following expenses:-

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Warehouse Wages Office Salaries Office Lighting Directors remuneration Rent, Rates and insurance of warehouse Warehouse lighting Trade magazine Bank charges Bad Debts Agents Commission Warehouse repair Travelling expenses Rent, Rates and insurance of office Printing & Stationery Donation Discount allowed

3600 2260 140 2800 620 540 140 200 340 11500 1020 1520 460 3000 300 3940

From the above information, find out the total of (i) selling expenses (ii) distribution expenses (iii)administrative expenses (iv) expenses which will not be considered in determining total costs.

Assignment ACosting Accounting is a system of foresight and not a post-mortem examination. Discuss the statement and explain how cost accounting serves as a tool of control in the hands of management. Give suitable illustrations to support your reasoning.

Cost Accounting: Cost Accounting is that branch of accounting which establishes budget and actual cost of operations, processes, departments or products and the analysis of variances, profitably or social use of funds. Managers use cost accounting to support a companys decision making to cut down a companys costs and improve profitability. As a form of management accounting, cost accounting need not follow accounting standards as its primary use is for internal managers rather than outside users.

Objectives of cost accounting: 1. Determining selling price: The objective of determining cost of products is the main objective of cost accounting. The total cost and the cost per unit of the product is important in deciding the selling price of the product. Cost accounting provides information to make and sell products or services. 2. Controlling cost: Cost accounting helps in achieving aim of controlling cost by using various techniques such as inventory control, standard costing and budgetary control. Each item of cost is budgeted at the beginning of the period and actual expenses incurred are compared with the budget. 3. Providing information for decision making: Cost accounting helps the management in providing information for managerial decisions for formulating operative policies. These policies relate to the following matters: Determination of cost-volume-profit relationship. Make or buy a component. Shut down or continue operation at a loss. Continue with the existing machinery or replace it with upgraded an economical machines.

4. Ascertaining costing profit: Cost accounting helps in ascertaining costing profit or loss of any activity on an objective basis by matching cost with the revenue of the activity.

5. Facilitating preparation of financial and other statements: Cost Accounting helps to produce statements at short intervals as management may require. In order for the business to operate at high efficiency, it is essential for management to have a review of production, sales and operating results. Cost accounting provides daily, weekly or monthly statements of units produced, accumulated cost with analysis. Cost accounting system provides immediate information regarding stock of raw materials; semi-finished goods and finished goods. This helps in the preparation of financial statements. 6. Price determination Cost accounts should provide information, which enables the management to fix remunerative selling prices for various items of products and services in different circumstances.

7. Curtailment of loss during the off-season Cost Accounting can also provide information, which may enable reduction of overheads, by utilizing idle capacity during the offseason.

8. Expansion: Cost Accounts may provide estimates of production of various levels on the basis of which the management may be able to formulate its approach to expansion.

9. Arriving at decisions Most of the decisions in a business undertaking involve correct statements of the likely effect on profits. Cost Accounts are of vital help in this respect. In fact, without proper cost accounting, decisions would be like taking a jump in the dark, such as when production of a product is stopped.

Difference between Cost Accounting & Financial Accounting: Basis 1.Objective Cost Accounting Financial Accounting

It provides information of It provides information about the ascertainment of cost to control cost financial performance as well as the and for decision making about the financial position of the business. cost. It classifies records, presents and It classifies records, presents and interprets in a significant manner the interprets transactions in terms of material, labor and overheads cost. money. It records and presents the It records historical data. estimated/budgeted data. It makes use of historical costs and pre determined costs. It is used by internal management at The users of financial statements different levels. are shareholders, creditors, financial analysts and government.

2.Nature

3.Recording of data

4.Users of information

5.Analysis of costs and It provides the details of cost and It shows the profit/loss of the profits profit of each product, process, job, organization. contracts. 6.Time period Its reports and statements are Financial statements are prepared prepared as and when required. for a definite period, usually a year.

7.Presentation of information

There are no set formats for A set format is used for presenting presenting cost information. financial information.

Cost accounting serves as a tool of control in the hands of the management A company having a proper cost accounting system will help the management in the following ways: 1) 2) 3) 4) The analysis of profitability of individual products, services or jobs. The analysis of profitability of different departments or operations. The analysis of cost behavior of various items of expenditure in the organization. A proper costing system locates differences between actual results & expected results. 5) It will assist in setting the prices so as to cover costs and generate an acceptable level of profit. 6) Cost records are the base for the Management Information systems. 7) The cost systems generate regular performance statements which management need for control purposes. 8) The costing records serve to analyze the final accounts of the company. i.e. the manufacturing, Trading and Profit and Loss accounts, in such a way as to give a detailed explanation of the sources of profit or loss. 9) Cost accounting systems are not only applicable to manufacturing organizations or functions but also extended to service organizations, functions. 10) The cost ascertainment, allocation, distribution can be efficiently made under efficient costing system.

For instance, in a company, if the management intends to know the profitability of the companys operations on an immediate basis then such information can be easily obtained by preparing the costing reports rather than waiting for the financial statements which will be available on a yearly basis. Thus by analyzing the costing reports the management of the company will be able to decide whether the company is moving towards profitability or is sustaining losses. Thus it will help the management in decision making.

Give a brief explanation about the industry and the cost components of the industry. Also give a method of costing and unit of cost against each industry.

1) Hotel industry: