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M-II-2002
ADVANCE COST ACCOUNTING
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METHOD OF COSTINGAre classifed into….
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Specifc order Costing
METHOD OF COSTING
Operation Costing Process CostingSingle Costing
Operting Costing
!o" Costing#tc$ Costing
Contrct Costing
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Specifc order Costing !o" Costing
#tc$ CostingContrct Costing
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!o" Costing
costs re collecte% n% cc&'<e%
ccor%ing to (o"s) contrcts) pro%&cts or*or+ or%ers. order o customers & Not continuous no uniormity in the ow o production Costs are collected and accumulated ater the completion
separate work in progress maintained
ach !o" is treated as a separate entity identiying profta"le and
unprofta"le !o"s. #ro$ides inormation or
preparation o estimates acilitates e%ecti$e cost
control t helps management to f'
selling price Spoilage and deecti$e works
can "e easily identifed cost(plus ormula o pricing "udgetary control o
) more la"our intensi$e) *ith increase in clerical work+
there are chances orcommitting more errors and
mistakes.) t does not pro$ide or thecontrol o cost
) di,cult to make costcomparison
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Specifc order Costing !o" Costing
#tc$ CostingContrct Costing
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#tc$Costing lot o, si'ilr &nits *$ic$ co'prise t$e "tc$ ' "e
&se% s cost &nit ,or scertin'ent o, cost.
Separate cost sheet is maintained or each "atch "y assigning a"atch num"er.
Cost per unit o product is determined "y di$iding the total cost oa "atch "y the num"er o units o that "atch.
-atch costing is used in drug industries+ readymade garments+
./. sets+ 0adio1s and lectronic Components 2anuacture.
-3 (4etermination o economic "atch lot is the important work in "atchcosting. he two types o costs in$ol$ed in "atch costing are 567 Set up costand 587 Carrying cost.(conomic -atch 3uantity will "alance these two opposing costs.
conomic -atch 3uantity 5-37 9
4 9 Annual #roduction or 4emand in :nits
S 9 Setup Cost per "atchC 9 Annual ;olding or Carrying Cost per unit
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Specifc order Costing !o" Costing
#tc$ CostingContrct Costing
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Contrct Costing
Ter'inl costing *$ic$ &n%ert+es %e/nite contrct ,orlong perio%
ach contract 9 separate unit o cost Separate ledger A
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Specifc order Costing !o" Costing
#tc$ CostingContrct Costing
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• >o" or order
• ach !o" is separate
• O$erheads are determined
• Cost at completion
!o"Costing
#tc$ Costing ContrctCosting
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THAN
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