Cost Accounting, 2e

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Cost Accounting, 2e

ISBN 9789393161772

Publication Date Thu May 01 00:00:00 UTC 2014

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Table of contents

Biographical note

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This textbook provides a clear exposition of the principles and practices of Cost Accounting. It adopts a solved problems approach and has numerous examples, worked out problems and questions and answers from university examinations. This book is pedagogy rich and includes varied end of chapter exercises.

Cover
Halftitle Page
Title Page
Copyright Page
Contents
Preface to the Second Edition
Preface to the First Edition
1 Cost Accounting—An Introduction
- Development of Cost Accounting
- Definition of Cost, Costing, Cost Accounting and Cost Accountancy
  - Cost
  - Costing
  - Cost Accounting
  - Cost Accountancy
- Objectives/Functions of Cost Accounting
- Fundamental Principles of Cost Accounting
- Relationship of Cost Accounting with Financial Accounting
  - Meaning of Financial Accounting
  - Limitations of Financial Accounting
  - Differences between Financial Accounting and Cost Accounting
- Relationship of Cost Accounting with Management Accounting
  - Advantages of Cost Accounting
  - Limitations of Cost Accounting
  - Objections against Cost Accounting
- Implementation of the Costing System
  - Practical Difficulties in Implementing a Costing System
- Essentials of a Good Cost Accounting System
- Classification of Costs
  - Cost Classification According to Elements
  - Cost Classification According to Functions
  - Cost Classification According to Nature of Cost
  - Cost Classification According to Controllability
  - Cost Classification According to Normality
  - Cost Classification According to Relevance to Decision-making and control
- Some Important Terms
  - Cost Centre
  - Cost Unit
- Methods of Costing
- Techniques or Types of Costing
  - Objective Type Questions
  - Theoretical Questions
2 Cost Sheet, Tenders And Quotations
- Introduction
  - Materials
  - Labour
  - Expenses
  - Overheads
- Items not to be Included in Cost Accounts
- Cost Sheet or Statement of Cost
  - Treatment of Stock or Inventories
- Tenders and Quotations
  - Illustrations
  - Objective Type Questions
  - Theoretical Questions
  - Exercise
3 Materials
- Introduction
  - Meaning of Material Control
  - Objectives of Material Control
  - Advantages of Material Control
  - Scope of Material Control
- Purchase of Materials
  - Centralised Vs Decentralised Purchasing
  - Purchase Procedure
  - Ascertainment of Cost of Materials Purchased
- Storing of Materials
  - Duties and Responsibilities of Storekeeper
  - Classification and Codification of Materials
  - Stores Records
  - Determination of Material Levels or Stock Levels
  - Determination of Re-order Quantity (Economic Ordering Quantity)
- Issue of Materials
- Pricing of Materials Issued
  - Cost Price Methods
  - Average Price Methods
  - Notional Price Methods
  - Pricing of Returns, Transfers, Shortage and Excess Materials
- Verification of Materials
  - Periodic Inventory System
  - Perpetual Inventory System
- Other Techniques of Material Control
  - ABC Analysis
  - Material or Inventory or Stock Turnover Ratio
  - Input-Output Ratio Analysis
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
4 Labour
- Introduction
  - Types of Labour Cost—Direct and Indirect
  - Control over Labour Cost
- Time Keeping
  - Methods of Time Keeping
- Time Booking
  - Methods of Time Booking
- Idle Time
  - Normal Idle Time
  - Abnormal Idle Time
- Overtime
- Labour Turnover
  - Causes of Labour Turnover
  - Measurement of Labour Turnover
- Methods of Labour Remuneration
  - Time Rate System
  - Piece Rate System
  - Incentive Schemes
  - Differential Piece Rates
  - Group Bonus Systems
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
5 Overheads
- Introduction
  - Defintion
- Classification Of Overheads
  - Function-Wise Classification
  - Element-Wise Classification
  - Behaviour-Wise Classification
- Departmentalisation of Overheads
- Allocation of Overheads
- Apportionment of Overheads
  - Basis of Apportionment of Overheads
- Re-apportionment of Overheads or Secondary Distribution of Overheads
  - Methods of Re-apportionment of Overheads
- Absorption of Overheads
  - Methods of Absorption of Overheads
- Computation of Machine Hour Rate
  - Comprehensive Machine Hour Rate
- Under-absorption and Over-absorption of Overheads
  - Treatment of Over or Under-absorbed Overheads
- Office and Administration Overheads
  - Accounting Treatment
- Selling and Distribution Overheads
  - Absorption of Selling and Distribution Overheads
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
6 Reconciliation Of Cost And Financial Accounts
- Introduction
  - Meaning of Reconciliation
  - Need for and Objectives of Reconciliation
  - Reasons for Difference in Profits
- Procedure of Reconciliation
  - Preparation of Reconciliation Statement
  - Preparation of Memorandum Reconciliation Account
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
7 Job, Batch And Contract Costing
- Introduction
- Job Costing
  - Special Features Of Job Costing
  - Advantages Of Job Costing
  - Limitations Of Job Costing
  - Procedure Of Job Cost Accounting
  - Work-In-Progress In Job Costing
- Batch Costing
  - Elements of Cost Relating to Batch Costing
- Economic Batch Quantity (EBQ)
- Contract Costing
  - Features of Contract Costing
  - Contract Costing and Job Costing—Differences
  - Procedure of Contract Costing
  - Escalation Clause
  - Cost-plus Contracts
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
8 Output Costing
- Introduction
  - Objects of Output Costing
  - Cost Accumulation under Output Costing
  - Presentation of Cost
  - Production Account
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
9 Operating And Operation Costing
- Operating Costing
  - Introduction
  - Cost Unit in Operating Costing
  - Procedure of Operating Costing
- Transport Costing
  - Collection of Cost
  - Classification of Cost
  - Selection of Appropriate Cost Unit
  - Preparation of Operating Cost Sheet
- Cinema House Operating Costing
- Hotel Operating Costing
- Power House or Boiler House Operating Costing
- Operation Costing
  - Illustrations
  - Objective Type Questions
  - Theoretical Questions
  - Exercise
10 Process Costing
- Introduction
  - Features of Process Costing
  - Distinction between Process Costing and Job Costing
  - Costing Procedure under Process Costing
- Special Points in Process Costing
- Process Loss
  - Normal Loss
  - Abnormal Loss
  - Abnormal Gain
  - Preparation of Process Accounts—With Normal Loss, Abnormal Loss and Abnormal Gain
- Interprocess Profits
  - Accounting Method
- Equivalent Production
  - Methods of Computing Equivalent Units
  - Evaluation of Equivalent Production
  - Types of Problems in Equivalent Production
- Joint Products and By-products
  - Joint Products
  - Accounting for Joint Products
  - Methods used in Apportioning Joint Cost
  - By-products
  - Accounting for By-products
  - Cost Methods
    - Illustrations
    - Objective Type Questions
    - Theoretical Questions
    - Exercise
11 Marginal Costing And Break-Even Analysis
- Introduction
- Concept of Marginal Cost
- Concept of Marginal Costing
  - Characteristics of Marginal Costing
  - Advantages of Marginal Costing
  - Limitations of Marginal Costing
- Marginal Costing and Absorption Costing
  - Meaning Of Absorption Costing
  - Distinction between Marginal Costing and Absorption Costing
- Cost–Volume–Profit Analysis
  - Some Important Concepts And Terms In CVP Analysis
- Break-even Analysis and Break-even Point
- Margin of SafetyBreak-even Charts
  - Assumptions Underlying Break-even Charts
  - Construction of Break-even Charts
  - Advantages of Break-even Charts
  - Limitations of Break-even Charts
  - Types of Break-even Charts
  - Profit Volume (P/V) Graph
- Applications of Marginal Costing
- Summary of Formulae for Cost–Volume–Profit Analysis or Break-even Analysis
  - Illustrations
  - Objective Type Questions
  - Short Answer Questions
  - Long Answer Questions
  - Exercises
Latest University Problems And Solutions
- Cost Sheet, Tenders and Quotations
- Materials
- Labour
- Overheads
- Reconciliation of Cost and Financial Accounts
- Job, Batch and Contract Costing
- Operating and Operation Costing
- Process Costing
- Marginal Costing and Break-even Analysis
Index

Dr. A. Murthy is Head and Assistant Professor, PG and Research Department of Commerce, A.A. Government Arts College, Cheyyar. He has more than 25 years of teaching experience. A prolific and best- selling author, he has written books on Financial Accounting, Corporate Accounting, Cost Accounting,
Management Accounting, Insurance, Industrial Organisation, Financial Management and Advanced Accounting.

Dr. Gurusamy holds a doctorate in Financial Services. He is currently Professor and Head, Department of Commerce, University of Madras, Chennai. He has more than 30 years of teaching and research experience. His area of interest includes accounting and finance, banking and insurance. A prolific writer, he has published books on Financial Services and Systems, Financial Markets and Institutions, Banking Theory Law and Practice and Merchant Banking and Financial Services.

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