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FEATURES OF PROCESS COSTING PROCESS COSTING- MEANING Process Costing is that aspect of operation costing which is used to ascertain the cost of the product at each process or stage of manufacture. This method of accounting used in industries where the process of manufacture is divided into two or more processes. The objective of process…
TREATMENT OF NORMAL LOSS AND ABNORMAL LOSS IN PROCESS COSTING In manufacturing processes, entire input is not getting converted into output. A certain part of input is lost while processing which is inevitable. Certain production techniques are of such a nature that some loss is inherent to the production. Wastages of material, evaporation of material…
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IMPORTANCE OF EQUIVALENT PRODUCTION IN VALUING WORK IN PROGRESS EQUIVALENT PRODUCTION Equivalent Production represents the production of a process in terms of completed units. In other words, it means converting the incomplete production units into its equivalent of complete units. In each process an estimate is made of the percentage completion of any work-in-progress. A production schedule…
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COST PLUS CONTRACTS IN CONTRACT COSTING Cost plus contract is a contract in which the value of the contract is ascertained by adding a certain percentage of profit over the total cost of the work. This is used in case of those contracts whose exact cost cannot be correctly estimated at the time of undertaking…
EMPLOYER LIABILITY TO PAY COMPENSATION UNDER WORKMEN COMPENSATION ACT 1923 The Workmen’s Compensation Act 1923 was introduced in India in 1923 as first social security of workmen and to protect the interests of the workmen. This Act is based on the theory that: “The cost of Product should bear the blood of the workmen.” SCOPE…
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Calculation of Profits in Contract Costing The contracts may be complete or incomplete contracts. Profits are calculated in both cases differently which is as follows: ASCERTAINMENT OF PROFITS ON COMPLETED CONTRACTS Profit on Completed Contracts: In case of contracts completed during the accounting year, the contract price, whether payable in lump sum on the completion…
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Meaning of escalation clause in Contract Costing An escalation clause in a contract is a provision that allows for adjustments to the contract price based on specified circumstances or factors. It is commonly used when there is a possibility of increased costs during the contract period due to factors beyond the control of either party….
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Methods of Cost Accounting and their Adaptability in different industries Different methods of costing are applied for ascertaining unit cost in different industries based on the nature of operation and unit of finished product involved. Basically, there are two methods of costing viz., Job Costing and Process Costing. Job costing is applied to special order…
Meaning of Cost Accounting Cost Accounting is an art or process of recording, analyzing and classifying of expenditure for the purpose of product costing or service costing, ascertainment of profitability, operational planning and cost control. It is a forward-looking approach which is related to the recording, analyzing and classifying of expenditure with the objective of…
“Cost Accounting is becoming more and more relevant in emerging scenario in India”- This statement is very true. Cost accounting is indeed becoming increasingly relevant in the emerging scenario of India. Several factors contribute to this growing significance: In conclusion, the emerging scenario in India, characterized by increasing competition, global integration, regulatory compliance, and emphasis…
