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BATCH COSTING Batch Costing is that form of specific order costing under which each batch is treated as a cost unit and costs are accumulated and ascertained separately for each batch. Each batch consists of a number of like units. In this system, a group of identical units, comprising of a batch is used as…
JOB COSTING Job costing or job order costing also called specific order costing is a method of costing which is used when work is undertaken as per the customer’s special requirement (tailor-made). ACCORDING TO INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS, LONDON “Job costing is that form of specific order costing which applies where work is…
COST SHEET VS PRODUCTION ACCOUNT Cost statement may be presented in the form of ledger account termed as “production account”. Production account presents information of production cost in an analytical manner according to double entry system. Cost of production and profit can be computed in this ledger. Cost Sheet Vs Production Account is as follows:…
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COST SHEET FORMAT Cost sheet is a device used to determine and present the cost under unit costing. Cost sheet format is a statement of costs incurred at each level of manufacturing a product or service. In a Cost sheet all the elements of cost is taken into consideration. It includes Prime cost, Factory/manufacturing cost,…
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UNIT COSTING Unit costing refers to the costing procedure, under which costs are accumulated and analyzed under different elements of cost and then cost per unit is ascertained by dividing the total cost by number of units produced. It is ideally used in case of concerns producing a single article on large scale by continuous…
RECONCILIATION OF COST AND FINANCIAL ACCOUNTS Reconciliation of Cost and Financial Accounts: When cost accounts and financial accounts are separately maintained in two different sets of books, two profit and loss accounts will be prepared—one for costing books and second for financial books. The profit or losses shown by the cost accounts may not agree…
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Traditional Costing Vs ABC Costing The difference between Traditional costing vs ABC costing is as follows: BASIS OF DIFFERENCE TRADITIONAL COSTING ACTIVITY BASED COSTING MEANING Traditional costing is the allocation of factory overhead to products based on the volume of production resources consumed. The Activity-Based Costing (ABC) is a costing system, which focuses on activities performed to produce…
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ACTIVITY BASED COSTING The Activity-Based Costing (ABC) is a costing system, which focuses on activities performed to produce Products. ABC is that costing in which costs are first traced to activities and then to products. ACCORDING TO CHARTERED INSTITUTE OF MANAGEMENT ACCOUNTANTS, LONDON “Activity Based Costing is cost attribution to cost units on the basis…
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OVER ABSORPTION AND UNDER ABSORPTION OF OVERHEADS Overhead expenses are usually applied to production on the basis of predetermined rates. The predetermined rates may represent estimated, actual or normal costs. If the actual expenses fall short of the amount applied, there is said to be an over-absorption of overheads, and, conversely, if the actual expenses…
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ABSORPTION OF OVERHEADS Absorption of overheads refers to the process of recovering allocated cost to a particular cost centre by the units produced in that cost centre. Absorption of Overheads means the distribution of the overhead expenses allotted to a particular department over the units produced in that department. Overhead absorption is accomplished by overhead…
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