Day: February 17, 2021

APPLICATION AND GENERAL PRINCIPLES  Application Until now we have been considering organisations with a cost unit which can be segregated, and have direct expenses wholly attributed to it.  Other types of organisation produce output in which a unit cannot be Read More …

INTRODUCTION  Service costing is defined as “cost accounting for services or functions, for example canteens, maintenance and HR. These may be referred to as service centres, departments or functions”.  Service industries are different to manufacturing in that their outputs are Read More …

INTRODUCTION In management accounting systems, costs are usually accumulated to meet both external management needs and external reporting requirements. Examples of these are: – Internal Management Needs: – Pricing decisions Determining Product Range Performance of departments External Reporting Requirements – Read More …

EXAMPLES OF EXPENSES So far we have examined two of the components of cost, namely labour and material costs.  The third cost element is expenses, which comprises all items not falling within the other two categories.  Examples therefore include rent, Read More …

METHODS OF REMUNERATION  Fixing Wage Rates Wage rates may be fixed by individual agreement between employer and employee, or more commonly by collective bargaining between trade unions and employers’ associations. An employer may pay wages on an hourly basis, per Read More …

 INTRODUCTION AND DEFINITIONS You have so far in your studies learned how cost accounting differs from financial accounting, how we can set up double entry cost accounts, how expenditure can be categorised into cost elements, and the nature of these Read More …

INTRODUCTION As we saw earlier in this study unit, costs can be divided either into direct and indirect costs, or variable and fixed costs. Direct costs are variable, that is the total cost varies in direct proportion to output.  If, Read More …

THE ELEMENTS OF COST The expenditure we are considering in our cost accounting is, of course, the same expenditure (subject to certain considerations which will be mentioned) as that which is dealt with in the financial accounts.  It is merely Read More …

NATURE AND FUNCTIONS OF COST ACCOUNTING  What Is “Cost Accounting”? The Chartered Institute of Management Accountants, in its publication, “Terminology of Management and Financial Accountancy”, defines cost accounting as: “…. that part of management accounting which establishes budgets and standard Read More …