Tag Archives | Cost Accounting

Cost Accounting: Meaning and Limitations

In this article we will discuss about:- 1. Meaning and Terminology of Cost Accounting 2. Objectives of Cost Accounting 3. Limitations of Cost Accounting. Meaning and Terminology of Cost Accounting: Cost: ‘Cost’ may be defined as: (i) The amount of expenditure (actual or notional) incurred on or attributable to a given thing; or (ii) To […]

Top 6 Types of Costing Systems | Cost Accounting

The following points highlight the top six types of costing systems. The types are: 1. Historical Costing 2. Absorption Costing 3. Direct Costing 4. Marginal Costing 5. Standard Costing 6. Uniform Costing. Type # 1. Historical Costing: In this type of costing system, the costs are ascertained only after they have been incurred. The main […]

Cost Accounting System: Necessity and Essentials

In this article we will discuss about:- 1. Introduction to Cost Accounting System 2. Necessity for Cost Accounting System 3. Reports Provided by Cost Accounting Department 4. Essentials of Good Cost Accounting System 5. Essential Factors for Good Cost Accounting System 6. Practical Difficulties in Installation of Cost Accounting System 7. Suggestions to Overcome Practical […]

Cost Centre: Meaning and Types | Cost Accounting

In this article we will discuss about the meaning and types of cost centres. Meaning of Cost Centre: Cost Centre: CIMA defines Cost Centre as “a production or service, function, activity or item of equipment whose costs may be attributed to cost units. A cost centre is the smallest organizational sub-unit for which separate cost […]

Cost Codification: Objectives and Methods | Cost Accounting

In this article we will discuss about:- 1. Objectives of Cost Codification 2. Requirements of Efficient Coding System 3. Methods. CIMA defines a coding “a system of symbols designed to be applied to a classified set of items, to give a brief accurate reference facilitating entry, collation and analysis”. Codification of costs is a system […]

Difference between Fixed Budget and Flexible Budget | Costs

The upcoming discussion will update you about the differences between fixed budget and flexible budget. Difference # 1. Fixed Budget: 1. Costs are not classified according to their variability, i.e., fixed, variable and semi- variable. 2. Fixed budget is inflexible and remains the same irrespective of the volume of business activity. 3. Fixed budget assumes […]

Strategic Cost Management | Accounting

The strategic cost management (SCM) is a fundamentally new way of managing an organization. It comprises: (a) A strategic analysis of the business to identify unprofitable products, customers, marketing and distribution channels, etc. (b) An evaluation of the business from a value chain perspective. Linkages, both internally and externally, are taken into consideration. (c) The […]

Classification of Costs: 5 Types | Accounting

The following points highlight the five main types of classification of costs. The types are: 1. Cost Classification by Nature 2. Cost Classification in Relation to Cost Centre 3. Cost Classification by Time 4. Cost Classification for Decision Making 5. Cost Classification by Nature of Production Process. Type # 1. Cost Classification by Nature: The […]

Separation of Cost into Fixed Cost and Variable Cost

The following methods are used in separation of such costs into fixed cost and variable cost. They are: 1. Industrial Engineering Method 2. Account Inspection Method 3. Scatter Graph Method 4. High and Low Method. 1. Industrial Engineering Method: This method is used to collect cost information that is not available in an organization’s records […]

Cost Classification by Behaviour | Accounting

In this article we will discuss about the cost classification by behaviour. The categories of classification are: 1. Variable Cost 2. Fixed Cost 3. Semi-Variable or Semi-Fixed Cost. 1. Variable Cost: The variable cost is a cost that tends to vary in accordance with level of activity within the relevant range and within a given […]

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