Cost of doing something which can be manufacturing an articles or rendering ( giving / providing) some

service or even conducting any activity function.

Finical accounting development to recording summarising and presenting finical data in systematic
position manner It gives information about the finical position of an organisation and showing the profit
/ loss of organisation preparation and presentation of financial statement are obligatory to joint stock
companies according to companies Act 1956. However the information generated by finical accountancy
for central purpose is not sufficient for decision making in many areas.
Such as 1) Acquisition of plant & machinery or other assets. 2) Product selection addition or deletion,
changing product combination in the case of multi product company. 3) Determining production
capacity 4) Determination of profit margin 5) Make or buy decision
The need of data & information for above factors led to development of cost accountancy.
• ORIGIN OF COST ACCOUNTANCY :-
Emergence of cost accounting is a major event in the history of civilisation. The progress of civilisation &
cast accounting have run parallel costing was practised by the summering in Mesopotamia in 5000 B.C.
People have applied costing principal to ascertain price to be changed to customer. Widespread interest
in the subject has been developed with Industrial Revolution which place in 1760 cost accounting was
applied to find out the cost of different product manufactured by different organised cost accounting
was develop as an independent discipline in the last century under the impact price control and
competition After 1st world war it was considered as a managerial tool for planning and control. It is
now being thought in business school as cost accountancy, cost management, Strange costing etc. due
to its utility in business cost concept are used by management for decision making.
• Cost- costing :- Meaning & Definitions:-
The Institute of cast & management and accountants ( ICMP) London. Has defined the term cost as “ The
amount of expenditure, actual or national, incurred on or attributable to a given thing.
National cost is import cost operating in cost accounts only, It is not acutely incurred It is reverent for
decision making Attributable cost is changeable to cost unit on some equitable basis. It is regarded as
the price paid for attaining the objective.
Costing is ascertgent of cost. It is different from cost accounting costing is defined by ICMA, London as “
Costing is the technique and process of ascertaining cost” It consist of rules and principle of
ascertainment of cost of a product or service., financial accounting may yields these information. All the
expenses regarding with a particular period are included under this process.
2) Analysis :- This involves this classification of expenses in to various elements of cost like material ,
labour and overhead.
3) Allocation :- When complete or entire amount of given expenses is charged directly to a particular
department or cost centre / work centre , is called allocation.
4) Apportionment :- When a given expenses cannot entirely charged to a particular department or work
centre, is distributed equitably amount the department concerned on appropriate basis
5) Absorption :- After allocation and apportionment of a cost to the department or cost centre, The
aggregate cost is absurd by or charged to the prod. Or services produced in that department This is done
using appropriate base of absorption known as “ unit rote”
Generally the process of allocation, apportion and absorption is essential in relation to indirect expenses
or overheads through this five process the expenses pertaining to a particular period are translated into
cost of product or service rendered.

2) Cost control :- It is second function of cost accounting it is define as “ tool for guidance and regulation
by executive action for cost of operating or undertaking “ This process involves :-
a) Setting up targets for expenses or activities like production, purchase, sales etc.
b) Measuring actual expenses through cost ascertainment techniques
c)Comparison between targeted and actual result and finding out deviation
and identifying the areas of efficiencies deficiencies
d) Analysing the causes deviations and fixing the responsibility on a
particular persons
e) Remedial action for improvement of performance in future
The measures adopted to control cost are known as “ Techniques of costing “
3) Reporting :- Reporting means prevention of the information obtained through cost methods and
techniques of costing to the management. The proper reporting system give right type and useful
information to concurred people of the right time proper reporting system helps management for
decision making.
These are the important function of cost accounting.
• Objective of cost Accounting :-
1) To ascertain cost of product or service rendered. For this purpose, it is necessary to record the
expenses incurred, classify them properly and then allocate or apportion it amongst the respective
product, processes or departments for calculating total cost of each of these.
2) To analyse the data and to provide suitable information to assist ( help) management for decision
making.
3) To provide information for planning and control through the technique of standard costing &
budgetary control
4) To locate and inform the management about inefficient areas of an origination like waste of material
time, expenses or imp• Types of costing:-
1) Historical costing:- Historical cost means to determination of cost after they have been actually
incurred It means cost of product can be calculated only after production It take in to account the cost in
the past figures. Hence It is called Historical costing
2) Standard costing :- It refers to determination of standard cost and applying them for measuring the
variations from the standard cost and actual cost The main purpose is standard cost is to control the
cost Standard costing is a costing technique
3) Uniform costing :- When the same costing system is used by several undertakings is called uniform
costing It is a system design by Trade association and followed by all business units.
4) Marginal costing:- It is system in which total cost is classified in to two categories Viz. Fixed and
variable fixed cost is not treated as a product cost only variable cost is charge to product. It helps the
management in taking various policy decisions .

• Cost Accounting :- Meaning cost accounting is the application of costing principles, methods and
technique in the ascertainment of cost and an analysis of saving or excess as compared with privies
experience or with standard cost accounting is the technique & process of ascertainment of cost which
begins with recording of expenses or the bases on which they are calculated and ends with preparation
of statistical data
Wheldon defines cost accounting as “ classifying, recording, appropriate allocation of expenditure for
determination of cost of product or services and for a presentation of suitably arrange data for purpose
of control and guidance of management.

*Functions of Cost Accounting :-

A) Cost Ascertainment:- Cost ascertainment or cost determination in voles five processes , which are
known 5 A’s
1) Ascertainment or collection :- Under this process the expenses are taken under the appropriate
heads, according to the nature of expanses

roper use of ma• Types of costing:-

1) Historical costing:- Historical cost means to determination of cost after they have been actually
incurred It means cost of product can be calculated only after production It take in to account the cost in
the past figures. Hence It is called Historical costing
2) Standard costing :- It refers to determination of standard cost and applying them for measuring the
variations from the standard cost and actual cost The main purpose is standard cost is to control the
cost Standard costing is a costing technique
3) Uniform costing :- When the same costing system is used by several undertakings is called uniform
costing It is a system design by Trade association and followed by all business units.
4) Marginal costing:- It is system in which total cost is classified in to two categories Viz. Fixed and
variable fixed cost is not treated as a product cost only variable cost is charge to product. It helps the
management in taking various policy decisions .

• Cost Accounting :- Meaning cost accounting is the application of costing principles, methods and
technique in the ascertainment of cost and an analysis of saving or excess as compared with privies
experience or with standard cost accounting is the technique & process of ascertainment of cost which
begins with recording of expenses or the bases on which they are calculated and ends with preparation
of statistical data
Wheldon defines cost accounting as “ classifying, recording, appropriate allocation of expenditure for
determination of cost of product or services and for a presentation of suitably arrange data for purpose
of control and guidance of management.

*Functions of Cost Accounting :-

A) Cost Ascertainment:- Cost ascertainment or cost determination in voles five processes , which are
known 5 A’s
1) Ascertainment or collection :- Under this process the expenses are taken under the appropriate
heads, according to the nature of expanses

chinery equipmen• Types of costing:-

1) Historical costing:- Historical cost means to determination of cost after they have been actually
incurred It means cost of product can be calculated only after production It take in to account the cost in
the past figures. Hence It is called Historical costing
2) Standard costing :- It refers to determination of standard cost and applying them for measuring the
variations from the standard cost and actual cost The main purpose is standard cost is to control the
cost Standard costing is a costing technique
3) Uniform costing :- When the same costing system is used by several undertakings is called uniform
costing It is a system design by Trade association and followed by all business units.
4) Marginal costing:- It is system in which total cost is classified in to two categories Viz. Fixed and
variable fixed cost is not treated as a product cost only variable cost is charge to product. It helps the
management in taking various policy decisions .

• Cost Accounting :- Meaning cost accounting is the application of costing principles, methods and
technique in the ascertainment of cost and an analysis of saving or excess as compared with privies
experience or with standard cost accounting is the technique & process of ascertainment of cost which
begins with recording of expenses or the bases on which they are calculated and ends with preparation
of statistical data
Wheldon defines cost accounting as “ classifying, recording, appropriate allocation of expenditure for
determination of cost of product or services and for a presentation of suitably arrange data for purpose
of control and guidance of management.

*Functions of Cost Accounting :-

A) Cost Ascertainment:- Cost ascertainment or cost determination in voles five processes , which are
known 5 A’s
1) Ascertainment or collection :- Under this process the expenses are taken under the appropriate
heads, according to the nature of expanses

t and tools. • Types of costing:-

1) Historical costing:- Historical cost means to determination of cost after they have been actually
incurred It means cost of product can be calculated only after production It take in to account the cost in
the past figures. Hence It is called Historical costing
2) Standard costing :- It refers to determination of standard cost and applying them for measuring the
variations from the standard cost and actual cost The main purpose is standard cost is to control the
cost Standard costing is a costing technique
3) Uniform costing :- When the same costing system is used by several undertakings is called uniform
costing It is a system design by Trade association and followed by all business units.
4) Marginal costing:- It is system in which total cost is classified in to two categories Viz. Fixed and
variable fixed cost is not treated as a product cost only variable cost is charge to product. It helps the
management in taking various policy decisions .

• Cost Accounting :- Meaning cost accounting is the application of costing principles, methods and
technique in the ascertainment of cost and an analysis of saving or excess as compared with privies
experience or with standard cost accounting is the technique & process of ascertainment of cost which
begins with recording of expenses or the bases on which they are calculated and ends with preparation
of statistical data
Wheldon defines cost accounting as “ classifying, recording, appropriate allocation of expenditure for
determination of cost of product or services and for a presentation of suitably arrange data for purpose
of control and guidance of management.

*Functions of Cost Accounting :-

A) Cost Ascertainment:- Cost ascertainment or cost determination in voles five processes , which are
known 5 A’s
1) Ascertainment or collection :- Under this process the expenses are taken under the appropriate
heads, according to the nature of expanses

• Types of costing:-
1) Historical costing:- Historical cost means to determination of cost after they have been actually
incurred It means cost of product can be calculated only after production It take in to account the cost in
the past figures. Hence It is called Historical costing
2) Standard costing :- It refers to determination of standard cost and applying them for measuring the
variations from the standard cost and actual cost The main purpose is standard cost is to control the
cost Standard costing is a costing technique
3) Uniform costing :- When the same costing system is used by several undertakings is called uniform
costing It is a system design by Trade association and followed by all business units.
4) Marginal costing:- It is system in which total cost is classified in to two categories Viz. Fixed and
variable fixed cost is not treated as a product cost only variable cost is charge to product. It helps the
management in taking various policy decisions .

• Cost Accounting :- Meaning cost accounting is the application of costing principles, methods and
technique in the ascertainment of cost and an analysis of saving or excess as compared with privies
experience or with standard cost accounting is the technique & process of ascertainment of cost which
begins with recording of expenses or the bases on which they are calculated and ends with preparation
of statistical data
Wheldon defines cost accounting as “ classifying, recording, appropriate allocation of expenditure for
determination of cost of product or services and for a presentation of suitably arrange data for purpose
of control and guidance of management.

*Functions of Cost Accounting :-

A) Cost Ascertainment:- Cost ascertainment or cost determination in voles five processes , which are
known 5 A’s
1) Ascertainment or collection :- Under this process the expenses are taken under the appropriate
heads, according to the nature of expanses