December 16, 2021

Reasons for Absorption of Overheads The following are a list of situations where analysis of overheads will be useful in evaluation of the relevant cost data. These situations include: a. The control of overhead expenditures There must be a link between overhead costs and the manager responsible for its control. This is best achieved by […]

MATERIAL/INVENTORY COSTING Introduction Materials are the tangible inputs into the process of producing useful output. Materials apply to firms that undergo manufacturing processes as part of their operations. Material costs form a large percentage of the cost of production and this is why they are normally incorporated under prime costs. Definition of Key Terms Materials:

Elements of Cost and Cost Behavior Cost Classifications Cost classification is defined as the arrangement of cost items in a logical sequence having regard to their nature and purpose to be fulfilled. Costs are classified according to the cost objectives. Cost objective is the activity for which a separate measure of cost is desired. They

Characteristics of an efficient Cost Accounting system An efficient cost accounting system should meet all its objectives and achieve all the advantages of a good cost accounting system. It should possess the following characteristics and should be taken into consideration at the time of installation of a cost accounting system. 1. Suitability to the business:

Differences between Cost Accounting and Financial Accounting Financial accounting is the preparation and communication of financial information to owners to provide information about how management of the enterprise has discharged its stewardship and custodial responsibilities for the use of resources entrusted to it. Cost accounting can be distinguished from financial accounting in various perspectives as