costing for material labour and overhead
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Sher-e-Kashmir University of Agricultural Sciences and Technology of Jammu
SCHO
OL O
F AGRI-BU
SINESS M
ANAG
EMEN
T
SCHOOL OF AGRI-BUSINESS MANAGEMENT“Nurturing Young Agri-Business Professionals for Evergreen Growth”
TOPIC :Costing for Material, Labour and Overhead
Course Title– Managerial Accounting & Control
Course No. : ABM 514
Course Instructor : Mr. Dalip Raina
Prepared By: Ankita Choudhary
COST ACCOUNTING COST ACCOUNTING IS THE CLASSIFICATION,RECORDING, AND APPROPRIATE ALLOCATION OF EXPENDITURE FOR THE DETERMINATION OF THE COSTS OF THE PRODUCT OR SERVICES
ELEMENT OF COST
MATERIAL COST
LABOUR COST EXPENSES
DIRECT MATERIAL DIRECT
LABOURINDIRECT LABOUR
DIRECT EXPENSES
INDIRECT EXPENSES
INDIRECT MATERIAL
OVERHEAD
OVERHEAD
OVERHEAD MAY BE DEFINED AS THE COST OF INDIRECT MATERIALS , INDIRECT LABOUR AND SUCH OTHER EXPENSES INCLUDING SERVICES WHICH CANNOT CONVENIENTLY BE CHARGED TO A SPECIFIC UNIT (I.E. INDIRECT EXPENSES).
PRODUCTION OVERHEADS Overheads means all indirect costs which are part and parcel of the total cost of production. But there is a great difficulty to know the amount if indirect cost of which a final output should bear. Because there is no direct relationship between indirect cost(overhead) and the production. Therefor through different stages of distribution of oh these are finally charged(i.E.ABSORBED) to the final output there are some stages to distribute the overhead
CLASSIFIATION OF OVERHEAD
BY FUNCTIONAL
BY BEHAVIOURWISE
BY ELEMENTWISE
BY
CONTROLLABILITY
Factory exp.
Selling exp.
Distribution exp.
Semi variable
exp.
Variable exp.
Fixed exp.
Uncontrolla-ble exp.
Controllable exp.
Ind. expenses
Ind. Labour
Ind. material
ALLOCATION OF COST Allocation Of Overhead Means, Whole Items Of Overheads Are Allocated To Production And Service Departments. Cost Allocation Is Defined As The Allotment Of Whole Items Of Cost To Cost Centers Or Cost Unit e.g. indirect wages of production dept. ‘A’ is to be allocated to dept. ‘A’ only. Similarly, wages of service dept. ’S’ is to be allocated to dept. ‘S’ only.