Preface

The world has been reduced to a Global Village, and Globalization has become the order of the day. In the era of Globalization and with the blessings of accounting experts, cost accounting has come to occupy a prominent place. On the other side, competition has become very intense among business houses, and price reduction has become a crucial weapon in the hands of the producers and marketers. Unless and otherwise the prices are kept as low as possible, the survival of the producers and marketers will be in peril. Apart from cost reduction, maximum utilization of resources has also become inevitable. Hence, the knowledge of cost accounting has become a must for every one, particularly for commerce and management students. In this context, a comprehensive text book is brought out.

Keeping the student community in mind, the book has been written in the following manner. Use of simple language, graded illustrations immediately followed by suitable exercises (a unique practice found only in this book) for better understanding, a wide range of questions drawn from various universities’ question papers and professional courses reflecting current cost accounting practices, pooling of various formulae at the end of each chapter (a unique practice found only in this book), covering 100% syllabi of all Indian universities, which makes it suitable for students of BCom, BBA, MCom, MBA, CA, ICWA and ACS, are some of the features.

Organization of the Book

This book comprises 15 chapters with a view to offering students a convenient and logically consistent build-up of knowledge.

Chapter 1, Overview of Cost Accounting, discusses the objectives and the advantages of cost accounting. It also explains how important cost accounting is when it comes to fixing and controlling the cost of a product.

Chapter 2, Basic Concepts of Cost, discusses the basic terms used in cost accounting along with their scope and usage. It also explains various methods of costing.

Chapter 3, Cost Sheet/Statement of Cost, discusses the components of cost sheet with and without adjustments. It also explains the items that are not included in cost sheet.

Chapter 4, Material Control/Inventory Control, discusses the different levels of stock and ideal stock level that has to be maintained. It also explains various inventory control measures like JIT analysis, VED analysis and ABC analysis.

Chapter 5, Pricing of Materials, discusses the steps to be taken in selecting a proper method of pricing. It also explains various methods of pricing of materials like FIFO, LIFO, base stock, simple average and weighted average.

Chapter 6, Labour, discusses the payment of wages to the workers. It also explains the various incentive schemes that can be adopted to enhance the performance of workers.

Chapter 7, Overheads Analysis, discusses the importance of overheads in fixing the cost of a product. It also explains the various basis of apportionment of overheads to departments.

Chapter 8, Overhead Rates, discusses the importance of machine hour rate as a basis for the absorption of factory overheads. It also explains the concept of under absorption and over absorption.

Chapter 9, Reconciliation of Cost and Financial Accounts, discusses the significance of reconciliation between cost and financial accounts. It also explains the factors that cause the differences between the two types of accounting.

Chapter 10, Contract Costing, discusses the principles involved in preparing a contract account. It also explains terms like work certified, work uncertified, profit on incomplete contracts and its treatment.

Chapter 11, Service Costing/Operating Costing, discusses how cost of the service rendered is ascertained. It also explains different cost units used in this type of service-providing sectors.

Chapter 12, Process Costing, discusses the distinct processes involved in converting raw material into the finished product. It also explains how the cost is ascertained at each process.

Chapter 13, Marginal Costing, discusses the importance of variable items of costs. It also explains terms like CVP analysis, BEP, P/V ratio and margin of safety.

Chapter 14, Budgetary Control, discusses the relevance of proper planning of financial activities. It also explains the various aspects of budgetary control measures.

Chapter 15, Standard Costing, discusses the relevance of standard cost to establish the cost of a product. It also explains the concept variances and their computations.

Feedback

Every effort has been put in to avoid any printing errors. Still, if the readers find any, please bring it to my notice so that such mistakes are avoided in the future. Constructive criticisms for the improvement of the book are most welcome. It is believed that this book would be a source of inspiration both for the learning and teaching community.

Comments and suggestions from faculties and students to enhance the contents of this book are welcome. I may be reached at [email protected]