Costing
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Costing as PDF for free.
More details
- Words: 1,894
- Pages: 52
COSTING Dr. T.K. Jain. AFTERSCHOOOL Centre for social entrepreneurship Bikaner M: 9414430763 [email protected] www.afterschool.tk www.afterschoool.tk
WHAT IS DIFFERENCE BETWEEN COSTING & COSTING ACCOUNTING?
COSTING IS ASCERTAINMENT OF COST. COST ACCOUNTING IS IS ENTIRE BRANCH OF RECORDING, CLASSIFYING AND ADOPTING METHODS FOR COST RECORDING.
WHAT IS DIFFERENCE BETWEEN COST ACCOUNTANCY AND COST ACCOUNTING?
COST ACCOUNTANCY IS THE BRANCH WHERE WE USE TOOLS AND TECHNIQUES TO MINIMISE COST. COST ACCOUNTING IS THE COLLECTION OF TOOLS AND TECHNIQUES FOR RECORDING AND CLASSIFYING COST.
WHAT IS SUNK COST?
THE COST ALREADY INCURRED IS CALLED SUNK COST.
WHAT IS NOTIONAL COST?
THE COSTS WHICH ARE NOT BE SPENT ARE CALLED NOTIONAL COST = EXAMPLE: SALARY OF OWNER (ENTREPRENEUR).
WHAT IS HISTORICAL COST?
THE COST WHICH HAS ALREADY BEEN INCURRED IN CALLED HISTORICAL COST.
MARGINAL COST?
COST OF ONE ADDITIONAL UNIT OF OUTPUT IS CALLED MARGINAL COST. FOR EXAMPLE, IF WE ARE MAKING 25 UNITS, AND OUR COST IS 100. NOW IF WE MAKE 26 UNITS, AND OUR COST IS 110. OUR MARGINAL COST IS 10 (ADDITIONAL COST).
OPPORTUNITY COST?
THE BENEFIT FORGONE BY SELECTING ONE ALTERNATIVE INSTEAD OF OTHER – FOR EXAMPLE, AS AN ENTREPRENEUR, YOU DON’T TAKE UP JOB (WHERE YOU COULD GET RS. 10 LAKH PER ANNUM) – YOUR OPPORTUNITY COST IS 10 LAKH.
HOW MANY TYPES OF OVERHEAD ARE THERE?
OVERHEAD ARE INDIRECT EXPENSES. INDIRECT EXPENSES = THOSE EXPENSES WHICH CANNOT BE ATTRIBUTED TO A PRODUCT DIRECTLY. TYPES: FACTORY OVERHEAH, ADMINISTRATION OVERHEAD (SALARY ETC.) SELLING OVERHEAD DISTRIBUTION OVERHEAD ETC.
Investment centre?
The business centre, which is responsible for generating revenue against investment. Evaluation criteria = Return on Investment (ROI). Example: suppose you work with Motilal Oswal and they invest in a branch Rs. 10 lakh and you have to generate minimum Rs. 2 lakh per annum – you are running investment centre.
Revenue Centre?
Where you are incharge of earning revenue (sales) – per annum.
Cost centre?
Unit – which is responsible for controlling cost is called cost centre. Example: production department Here your objective is to minimise production cost.
Profit centre?
Revenue – cost = profit. The centre which is responsible for earning profit is called profit centre.
REORDER LEVEL?
MAXIMUM CONSUMPTION * MAXIMUM LEAD TIME. EXAMPLE: Suppose you have maximum 10 units of consumption per day. Maximum lead time is 10 days. ROL = 10*10 =100.
What are tools of inventory controls?
TWO BIN SYSTEM PERPETUAL INVENTORY SYSTEM CONTINUOUS STOCK SYSTEM ABC ANALYSIS EOQ METHOD
TWO BIN SYSTEM?
Here we allot two Bins (Bin means any rack were goods are kept). One Bin is alloted for minimum (safety stock) and other bin is alloted for usual consumption. If the 2nd bin gets empty, then we use the first Bin (containing safety stock). We have to place order as soon as 2nd bin is about to finish.
Perpetual inventory system?
We have 2 things here: 1. bin card (stock card) 2. Stock ledger (stores ledger). When goods are issued, entry is made in both the records and thus we have a proper system of record taking. Bin card is placed where goods are lying in godown.
Continuous Stock taking?
Here you take stock (physical verification of goods) periodically. It is a part of internal audit.
ABC ANALYSIS ?
Goods are classified in 3 categories : A : VERY COSTLY GOODS. B: low to moderate cost C : bulky goods – having lower value. Pay complete attention to A goods. A goods are those, which have 80% of our investment (of inventory) have have 20% of spece only.
TAYLOR’S PLAN?
If out put is below average= pay 83% of normal wages If output is above average = pay 125% of normal wages.
Mericks Differential Piece System
Give bonus for outperforming workers. Normal wages for upto 83% efficiency 10% bonus for efficiency between 83 & 100% efficiency 20% or higher bonus for above 100% efficiency.
EMERSON PLAN?
Normal wages for efficiency upto 66% 20% bonus for 66 to 100% efficiency 1% additional bonus for every 1% increase in efficiency beyond 100%.
GANTT PLAN?
Normal wages for below standard wages 20% bonus for standard work Higher piece rate for above standard work.
Halsey plan?
Time taken * time rate + .5(time saved * time rate)
Halsey Weir Plan?
Time taken * time rate + .3 (time saved * time rate)
Rowan Plan?
Time taken * time rate + (time saved * time rate* (time taken / time allowed))
How do you calculate labour turnover?
Labour turnover means number of employees leaving your company. 3 formulaes: A. Separation Method B. Replacement Method C. Flux Method
Separation Method?
No. of employees separated / Avg. no. of employees
Replacement Method:
No. of employees replaced / Avg. no. of employees
Flux Method?
(No. of employees replaced + New recruits) / Avg. no. of employees on payroll.
What is overhead allocation?
Recording fixed overhead in concerned department is called overhead allocation. For example salary of foreman is recorded in production department.
What is overhead apportionment?
When fixed overhead is distributed between different departments on the basis of some rational criteria – it is called overhead apportionment. For example, Rent is apportioned between different departments on the basis of space.
Reapportionment of overhead?
Overhead apportioned to service departments is again reapprotioned to other departments, it is called reapportionment of overhead.
Absorption of overhead?
Here we allot overhead expenses to units produced. For example, we have found that overhead expenses are Rs. 5 per unit – so we allot expenses to each unit and calculate cost of that unit. Absorption costing is the technique for ascertaining cost of each unit manufactured.
What are methods of reapportionment of overheads?
1. Simple redistribution 2. Step ladder method 3. reciprocal distribution
Simple redistribution method:
For example, HRD department expenditures of Rs. 50000 are equally distributed between production department X and production department Y.
Step Ladder Method? Let us assume service dept are A & B. X
Y
A
40%
40%
B
50%
50%
A
B 20%
Reciprocal Method X
Y
A
40%
40%
B
30%
45%
A
B
20%
25%
WHAT IS Activity Based Costing?
System of costing, where costing is done on the basis of activity.
ABOUT AFTERSCHOOOL Afterschoool conducts three year integrated PGPSE (after class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.
Why such a programme?
To promote people to take up entrepreneurship and help develop the society To enable people to take up franchising and other such options to start a business / social development project To enable people to take up social development as their mission To enable people to promote spirituality and positive thinking in the world
Who are our supporters?
Afterschoolians, our past beneficiaries, entrepreneurs and social entrepreneurs are supporting us. You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.
About AFTERSCHOOOL PGPSE – the best programme for developing great entrepreneurs
Most flexible, adaptive but rigorous programme Available in distance learning mode Case study focused- latest cases Industry oriented practical curriculum Designed to make you entrepreneurs – not just an employee Option to take up part time job – so earn while you learn The only absolutely free course on internet
Workshops from AFTERSCHOOOL
IIF, Delhi CIPS, Jaipur ICSI Hyderabad Branch Gyan Vihar, Jaipur Apex Institute of Management, Jaipur Aravali Institute of Management, Jodhpur Xavier Institute of Management, Bhubaneshwar Pacific Institute, Udaipur Engineering College, Hyderabad
Flexible Specialisations:
Spiritualising business and society Rural development and transformation HRD and Education, Social Development NGO and voluntary work Investment analysis,microfinance and inclusion Retail sector, BPO, KPO Accounting & Information system (with CA / CS /CMA) Hospital management and Health care Hospitality sector and culture and heritage Other sectors of high growth, high technology and social relevance
Salient features:
The only programme of its kind (in the whole world) No publicity and low profile course For those who want to achieve success in life – not just a degree Indepth knowledge and expertise Professional approac: World class approach Strong intellectual and business capabilities Flexible – you may stay for a month and continue the rest of the education by distance mode. / you may attend weekend classes Scholarships for those from poor economic background Latest and constantly changing curriculum – keeping pace with the time Placement for those who are interested Admissions open throughout the year Latest and most advanced technologies, books and study material
Components
Pedagogy curriculum and approach based on IIM Ahmedabad and ISB Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad) Meditation, spiritualisation, and self development Essential softwares for business Business plan, Research projects Participation in conferences / seminars Workshops on leadership, team building etc. Written submissions of research projects/articles / papers Interview of entrepreneurs, writing biographies of entrepreneurs Editing of journals / newsletters Consultancy / research projects Assignments, communication skill workshops Participation in conferences and seminars Group discussions, mock interviews, self development diaryng Mind Power Training & writing workshop (by Dr. T.K.Jain)
Pedagogy
Case analysis, Articles from Harvard Business Review Quiz, seminars, workshops, games, Visits to entrepreneurs and industrial visits Presentations, Latest audio-visuals Group discussions and group projects Periodic self assessment Mentoring and counselling Study exchange programme (with institutions out of India) Rural development / Social welfare projects
Branches
AFTERSCHOOOL will shortly open its branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.
Case Studies
We want to write case studies on social entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.
Basic values at afterschoool
Share to learn more Interact to develop yourself Fear is your worst enemy Make mistakes to learn Study & discuss in a group Criticism is the healthy route to mutual support and help Ask fundamental questions : why, when, how & where? Embrace change – and compete with yourself only
www.afterschoool.tk social entrepreneurship for better society
WHAT IS DIFFERENCE BETWEEN COSTING & COSTING ACCOUNTING?
COSTING IS ASCERTAINMENT OF COST. COST ACCOUNTING IS IS ENTIRE BRANCH OF RECORDING, CLASSIFYING AND ADOPTING METHODS FOR COST RECORDING.
WHAT IS DIFFERENCE BETWEEN COST ACCOUNTANCY AND COST ACCOUNTING?
COST ACCOUNTANCY IS THE BRANCH WHERE WE USE TOOLS AND TECHNIQUES TO MINIMISE COST. COST ACCOUNTING IS THE COLLECTION OF TOOLS AND TECHNIQUES FOR RECORDING AND CLASSIFYING COST.
WHAT IS SUNK COST?
THE COST ALREADY INCURRED IS CALLED SUNK COST.
WHAT IS NOTIONAL COST?
THE COSTS WHICH ARE NOT BE SPENT ARE CALLED NOTIONAL COST = EXAMPLE: SALARY OF OWNER (ENTREPRENEUR).
WHAT IS HISTORICAL COST?
THE COST WHICH HAS ALREADY BEEN INCURRED IN CALLED HISTORICAL COST.
MARGINAL COST?
COST OF ONE ADDITIONAL UNIT OF OUTPUT IS CALLED MARGINAL COST. FOR EXAMPLE, IF WE ARE MAKING 25 UNITS, AND OUR COST IS 100. NOW IF WE MAKE 26 UNITS, AND OUR COST IS 110. OUR MARGINAL COST IS 10 (ADDITIONAL COST).
OPPORTUNITY COST?
THE BENEFIT FORGONE BY SELECTING ONE ALTERNATIVE INSTEAD OF OTHER – FOR EXAMPLE, AS AN ENTREPRENEUR, YOU DON’T TAKE UP JOB (WHERE YOU COULD GET RS. 10 LAKH PER ANNUM) – YOUR OPPORTUNITY COST IS 10 LAKH.
HOW MANY TYPES OF OVERHEAD ARE THERE?
OVERHEAD ARE INDIRECT EXPENSES. INDIRECT EXPENSES = THOSE EXPENSES WHICH CANNOT BE ATTRIBUTED TO A PRODUCT DIRECTLY. TYPES: FACTORY OVERHEAH, ADMINISTRATION OVERHEAD (SALARY ETC.) SELLING OVERHEAD DISTRIBUTION OVERHEAD ETC.
Investment centre?
The business centre, which is responsible for generating revenue against investment. Evaluation criteria = Return on Investment (ROI). Example: suppose you work with Motilal Oswal and they invest in a branch Rs. 10 lakh and you have to generate minimum Rs. 2 lakh per annum – you are running investment centre.
Revenue Centre?
Where you are incharge of earning revenue (sales) – per annum.
Cost centre?
Unit – which is responsible for controlling cost is called cost centre. Example: production department Here your objective is to minimise production cost.
Profit centre?
Revenue – cost = profit. The centre which is responsible for earning profit is called profit centre.
REORDER LEVEL?
MAXIMUM CONSUMPTION * MAXIMUM LEAD TIME. EXAMPLE: Suppose you have maximum 10 units of consumption per day. Maximum lead time is 10 days. ROL = 10*10 =100.
What are tools of inventory controls?
TWO BIN SYSTEM PERPETUAL INVENTORY SYSTEM CONTINUOUS STOCK SYSTEM ABC ANALYSIS EOQ METHOD
TWO BIN SYSTEM?
Here we allot two Bins (Bin means any rack were goods are kept). One Bin is alloted for minimum (safety stock) and other bin is alloted for usual consumption. If the 2nd bin gets empty, then we use the first Bin (containing safety stock). We have to place order as soon as 2nd bin is about to finish.
Perpetual inventory system?
We have 2 things here: 1. bin card (stock card) 2. Stock ledger (stores ledger). When goods are issued, entry is made in both the records and thus we have a proper system of record taking. Bin card is placed where goods are lying in godown.
Continuous Stock taking?
Here you take stock (physical verification of goods) periodically. It is a part of internal audit.
ABC ANALYSIS ?
Goods are classified in 3 categories : A : VERY COSTLY GOODS. B: low to moderate cost C : bulky goods – having lower value. Pay complete attention to A goods. A goods are those, which have 80% of our investment (of inventory) have have 20% of spece only.
TAYLOR’S PLAN?
If out put is below average= pay 83% of normal wages If output is above average = pay 125% of normal wages.
Mericks Differential Piece System
Give bonus for outperforming workers. Normal wages for upto 83% efficiency 10% bonus for efficiency between 83 & 100% efficiency 20% or higher bonus for above 100% efficiency.
EMERSON PLAN?
Normal wages for efficiency upto 66% 20% bonus for 66 to 100% efficiency 1% additional bonus for every 1% increase in efficiency beyond 100%.
GANTT PLAN?
Normal wages for below standard wages 20% bonus for standard work Higher piece rate for above standard work.
Halsey plan?
Time taken * time rate + .5(time saved * time rate)
Halsey Weir Plan?
Time taken * time rate + .3 (time saved * time rate)
Rowan Plan?
Time taken * time rate + (time saved * time rate* (time taken / time allowed))
How do you calculate labour turnover?
Labour turnover means number of employees leaving your company. 3 formulaes: A. Separation Method B. Replacement Method C. Flux Method
Separation Method?
No. of employees separated / Avg. no. of employees
Replacement Method:
No. of employees replaced / Avg. no. of employees
Flux Method?
(No. of employees replaced + New recruits) / Avg. no. of employees on payroll.
What is overhead allocation?
Recording fixed overhead in concerned department is called overhead allocation. For example salary of foreman is recorded in production department.
What is overhead apportionment?
When fixed overhead is distributed between different departments on the basis of some rational criteria – it is called overhead apportionment. For example, Rent is apportioned between different departments on the basis of space.
Reapportionment of overhead?
Overhead apportioned to service departments is again reapprotioned to other departments, it is called reapportionment of overhead.
Absorption of overhead?
Here we allot overhead expenses to units produced. For example, we have found that overhead expenses are Rs. 5 per unit – so we allot expenses to each unit and calculate cost of that unit. Absorption costing is the technique for ascertaining cost of each unit manufactured.
What are methods of reapportionment of overheads?
1. Simple redistribution 2. Step ladder method 3. reciprocal distribution
Simple redistribution method:
For example, HRD department expenditures of Rs. 50000 are equally distributed between production department X and production department Y.
Step Ladder Method? Let us assume service dept are A & B. X
Y
A
40%
40%
B
50%
50%
A
B 20%
Reciprocal Method X
Y
A
40%
40%
B
30%
45%
A
B
20%
25%
WHAT IS Activity Based Costing?
System of costing, where costing is done on the basis of activity.
ABOUT AFTERSCHOOOL Afterschoool conducts three year integrated PGPSE (after class 12th along with IAS / CA / CS) and 18 month PGPSE (Post Graduate Programme in Social Entrepreneurship) along with preparation for CS / CFP / CFA /CMA / FRM. This course is also available online also. It also conducts workshops on social entrepreneurship in schools and colleges all over India – start social entrepreneurship club in your institution today with the help from afterschoool and help us in developing society.
Why such a programme?
To promote people to take up entrepreneurship and help develop the society To enable people to take up franchising and other such options to start a business / social development project To enable people to take up social development as their mission To enable people to promote spirituality and positive thinking in the world
Who are our supporters?
Afterschoolians, our past beneficiaries, entrepreneurs and social entrepreneurs are supporting us. You can also support us – not necessarily by money – but by being promotor of our concept and our ideas.
About AFTERSCHOOOL PGPSE – the best programme for developing great entrepreneurs
Most flexible, adaptive but rigorous programme Available in distance learning mode Case study focused- latest cases Industry oriented practical curriculum Designed to make you entrepreneurs – not just an employee Option to take up part time job – so earn while you learn The only absolutely free course on internet
Workshops from AFTERSCHOOOL
IIF, Delhi CIPS, Jaipur ICSI Hyderabad Branch Gyan Vihar, Jaipur Apex Institute of Management, Jaipur Aravali Institute of Management, Jodhpur Xavier Institute of Management, Bhubaneshwar Pacific Institute, Udaipur Engineering College, Hyderabad
Flexible Specialisations:
Spiritualising business and society Rural development and transformation HRD and Education, Social Development NGO and voluntary work Investment analysis,microfinance and inclusion Retail sector, BPO, KPO Accounting & Information system (with CA / CS /CMA) Hospital management and Health care Hospitality sector and culture and heritage Other sectors of high growth, high technology and social relevance
Salient features:
The only programme of its kind (in the whole world) No publicity and low profile course For those who want to achieve success in life – not just a degree Indepth knowledge and expertise Professional approac: World class approach Strong intellectual and business capabilities Flexible – you may stay for a month and continue the rest of the education by distance mode. / you may attend weekend classes Scholarships for those from poor economic background Latest and constantly changing curriculum – keeping pace with the time Placement for those who are interested Admissions open throughout the year Latest and most advanced technologies, books and study material
Components
Pedagogy curriculum and approach based on IIM Ahmedabad and ISB Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad) Meditation, spiritualisation, and self development Essential softwares for business Business plan, Research projects Participation in conferences / seminars Workshops on leadership, team building etc. Written submissions of research projects/articles / papers Interview of entrepreneurs, writing biographies of entrepreneurs Editing of journals / newsletters Consultancy / research projects Assignments, communication skill workshops Participation in conferences and seminars Group discussions, mock interviews, self development diaryng Mind Power Training & writing workshop (by Dr. T.K.Jain)
Pedagogy
Case analysis, Articles from Harvard Business Review Quiz, seminars, workshops, games, Visits to entrepreneurs and industrial visits Presentations, Latest audio-visuals Group discussions and group projects Periodic self assessment Mentoring and counselling Study exchange programme (with institutions out of India) Rural development / Social welfare projects
Branches
AFTERSCHOOOL will shortly open its branches in important cities in India including Delhi, Kota, Mumbai, Gurgaon and other important cities. Afterschooolians will be responsible for managing and developing these branches – and for promoting social entrepreneurs.
Case Studies
We want to write case studies on social entrepreneurs, first generation entrepreneurs, ethical entrepreneurs. Please help us in this process. Help us to be in touch with entrepreneurs, so that we may develop entrepreneurs.
Basic values at afterschoool
Share to learn more Interact to develop yourself Fear is your worst enemy Make mistakes to learn Study & discuss in a group Criticism is the healthy route to mutual support and help Ask fundamental questions : why, when, how & where? Embrace change – and compete with yourself only
www.afterschoool.tk social entrepreneurship for better society
Related Documents
Costing
December 2019 40
Costing
November 2019 42
Costing
November 2019 39
Costing
November 2019 42
