Basic Cost Concepts

Basic salute Concepts Meaning of terms Accounting price accounting is concerned with ? recording, classifying and summarizing costs for determination of costs of products or services, ? planning, controlling and reducing such costs and ? furnishing of information to circumspection for decision-making. Cost accounting, thus, provides information to the management for decision of all sorts. It serves ten-fold purposes on account of which it is generally indistinguishable from management accounting. Objectives of Cost Accounting 1. Determining selling price 2. Determining and controlling efficiency 3. Facilitates the preparation of fiscal and other statements 4. Providing undercoat for operating policy a. Determination of cost-volume-profit relationship b. Shutting win or operating at a loss c. Making or buying from outside suppliers d. Continuing with the existing plant and machinery or replacing them by improved and economic ones. Concept of Cost Cost the amount of expenditure (actual or estimated) incurred on, or attributable to, a given thing. However, the term cost cannot be exactly defined.

Its exposition depends upon ? The nature of the business, or industry, and ? The context in which it is used Cost Classification 1. firm, multivariate and Semi-variable costs a) Fixed Costs costs which do not change with changes in volume of output/activity deep down a specified (relevant) figure for a given compute period. There is an inverse relationship between volume and pertinacious cost per whole ? No. of Units produced ? Fixed cost per unit ? Hence, Fixed Costs are constant on aggregate basis but are variable on a unit basis. b) Variable costs costs that tend to vary in direct proportion or in a matched relationship to changes in production activity, sales activity or some other measure of volume, within relevant range for a given budget... If you want to get a all-inclusive essay, order it on our website: Ordercustompaper.com

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