A study on cost and costing models in nlcil

Introduction:
Cost:
cost means a benefit given up in the terms of money to acquire a goods or service . Its
commonly defined as sacrificed recourses for a particular thing
Costing:
It is a process for determining the cost . it is a technique for ascertaining the cost of
production of any product and service in business organisation

NEED :

OBJECTIVES:
 To arrive at the cost of production of every unit, job, operation, process, department or
service and to develop cost standard.

 To reveal sources of economies in production having regard to methods, types of

equipment, design, output and layout. Daily, weekly, monthly or quarterly information
may be necessary to ensure prompt and constructive action.

 Minimizing Wastage: Cost control and reduction so attained helps in

reducing the wastage during the manufacturings process.

 Budgeting: It generates the estimated cost of products or services to assist in

budget planning, implementation and control.

SCOPE:
Cost Audit: To verify the cost sheets and ensure the efficient application of cost accounting
principles in the industries, cost audits are done.

Cost System: It provides for time to time monitoring and evaluation of the cost incurred in
the production of goods and services to generate cost reports for the management.

Cost Control: Sometimes, the actual cost of a product or service becomes higher than its
standard cost. To eliminate the difference and control the actual cost, cost accounting is
required.