COST

Refers

to the amount of
expenditure (actual or notional)
incurred on or attributed to a
given thing
Costing refers to the technique
and process of ascertaining
costs

Kinds of Cost
Notional

Cost
Opportunity Cost
Sunk Cost
Relevant Cost

Two Important
Classification Of Cost
Fixed Cost and Variable Cost
Direct Cost and Indirect Cost

Fixed Cost
The total FC does not change with
change with change volume
Per unit Fixed cost changes with
volume

Should not commit for more fixed cost to achieve

Economies of scale.

Variable cost
Total Variable cost changes with
change in volume
Per unit variable cost does not
changes with the change in volume

Advantages of Cost Accounting

Reveals unprofitable activities

locates exact causes of increase in
decrease in p & L
helps in decision making
price fixation
optimum level of efficiency
cost control
value of stock

Why Cost is being discussed ??????

Clients give Projected Statements

Financial Projections
Projected Income and Expenditure statement
Forecasted profit
etc
cost of goods sold changes..
Selling price - Cost of goods sold = Profit.
If Cost of Goods Sold = Opening stock + direct exp + Purchases
Closing Stock .
If Closing stock is valued at marginal cost what happens and fi
valued at full cost what happens