TECHNIQUES OF COSTINGTECHNIQUES OF COSTING

WORK STUDYWORK STUDYMATERIAL CONTROLMATERIAL CONTROLSTANDARD COSTINGSTANDARD COSTINGBUDGETARY CONTROLBUDGETARY CONTROL

WORK STUDYWORK STUDY

• DEFINITIONDEFINITION

Work study is defined as that body of Work study is defined as that body of knowledge concerned with the knowledge concerned with the analysis of the work methods and the analysis of the work methods and the equipments used in performing a job, equipments used in performing a job, the design of an optimum work the design of an optimum work method and the standardisation of method and the standardisation of proposed work methods.proposed work methods.

Objective of work studyObjective of work study

• To analyse the jobTo analyse the job

• To measure the work content of the To measure the work content of the jobjob

• To increase productivityTo increase productivity

• To improve operational efficiencyTo improve operational efficiency

Benefits of work studyBenefits of work study

• Increased productivityIncreased productivity

• Improved work flowImproved work flow

• Fair wages to emplyeesFair wages to emplyees

• Better working condition to Better working condition to employeesemployees

• Reduced material handling costReduced material handling cost

• Reduced manufacturing costReduced manufacturing cost

MATERIAL CONTROLMATERIAL CONTROL

• It is a systematic control over the It is a systematic control over the purchasing, storing , and using of purchasing, storing , and using of materials so as to have the minimum materials so as to have the minimum possible cost of material.possible cost of material.

Objective of material controlObjective of material control• Availability of materialAvailability of material• No excessive investment in materialsNo excessive investment in materials• Reasonable priceReasonable price• Minimum wastageMinimum wastage• No risk of spoilage and obsolescenceNo risk of spoilage and obsolescence• Ready information about availability Ready information about availability

of materialsof materials• Misappropriation of materialsMisappropriation of materials• Right amount of payment to suppliersRight amount of payment to suppliers

STANDARD COSTINGSTANDARD COSTING

• It is the preparation of standard costs It is the preparation of standard costs and applying them to measure and applying them to measure variations from actual costs and variations from actual costs and analyzing the causes of variations with analyzing the causes of variations with a view to maintain maximum efficiency a view to maintain maximum efficiency in production . It is a technique which in production . It is a technique which uses standards for costs and revenues uses standards for costs and revenues for the purpose of control through for the purpose of control through variance analysis.variance analysis.

BUDGETARY CONTROLBUDGETARY CONTROL

• It is one of the tool to the It is one of the tool to the management in controlling the costs.management in controlling the costs.

• Budgetory control can be prepared Budgetory control can be prepared on the basis of past figures adjusted on the basis of past figures adjusted to future trends.to future trends.

Difference between standard Difference between standard costing and budgetary controlcosting and budgetary control

• Standards are based on technical Standards are based on technical assessments whereas budgets are based on assessments whereas budgets are based on past actual adjisted to future trends.past actual adjisted to future trends.

• Budgetary control deals with the operations Budgetary control deals with the operations of a department of business as a whole while of a department of business as a whole while standard costing is applied to manufacturing standard costing is applied to manufacturing of a product, process or providing service.of a product, process or providing service.

• Budgetary control is extensive whereas Budgetary control is extensive whereas standard costing is intensive.standard costing is intensive.

• In budgetary control , variances are In budgetary control , variances are not revealed through the accounts not revealed through the accounts but are revealed in total. But in but are revealed in total. But in standard costing , variances are standard costing , variances are analysed in detail according to their analysed in detail according to their originating causes. Thus standard originating causes. Thus standard costing reveals variances through costing reveals variances through different accounts.different accounts.

conclusionconclusion

• Both standard costing and budgetary Both standard costing and budgetary control are complimentary to each control are complimentary to each other and for maximum efficiency other and for maximum efficiency both should be used simultaneously . both should be used simultaneously . Both may prove more effective if Both may prove more effective if they are used in conjunction to each they are used in conjunction to each other.other.

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