Cost element, Cost Accounting

Cost Element

Stage 1. Cost Elements

The raw data concern with Labour, Expenses, and Materials are gathered from Invoices, Payroll, and Requisitions and Goods Issued Notes.

860_cost element.png

Stage 2. Coding

Each the raw cost data requires to be classified and after that coded in respect of the type of expense and location. This procedure is fundamental to all management and costing accounting procedures.

Stage 3. Cost Analysis

Whereas discrete items of cost can be selected to cost centers this is termed allocation.  Whereas the cost has to be shared or spread over some cost centers this is identified as apportionment.

Stage 4. Service Cost Centres

These are cost centers that provide a service to production cost centers.  Examples are Maintenance, Sores and Boiler House.  Their costs are built up through the common process of allocation and primary apportionment and then their net costs are apportioned or secondary apportionment over the production cost centers, hence forming part of production overheads that are absorbed into the cost units produced.  The difficulties of service cost centers are dealt along with in more detail underneath.

Stage 5. Production Cost Centres

These are the cost centers included directly in the production process.  Typical examples are the , Spray Shop, Assembly shop, Centre lathes, Drilling machines.

Stage 6  Overhead Absorption

The overheads of all production cost centre are absorbed into the costs of the units produced, generally in proportion to the time included that is by the Machine Hour or Labour Hour Rate.

Posted Date: 2/5/2013 6:54:27 AM | Location : United States







Related Discussions:- Cost element, Assignment Help, Ask Question on Cost element, Get Answer, Expert's Help, Cost element Discussions

Write discussion on Cost element
Your posts are moderated
Related Questions
specimen of cost sheet

Example of Job Order Costing The given transactions were made by a company in the month of December. Direct Materials a) 8,000/- was bought on credit, out of these


Functional Classification of Costs Beneath this classification, costs are classified according to the function they execute in an organization.  Costs can functionally be clas


Smart Ltd ha sa unit selling price of $500 variable costs per unit of $325 and fixed costs of $140 000. Calculate the break even point in units using (a) a mathematical equations a

Approach in Cost Accounting Cost accounting is based on the framework or concept of cost centers that is all the costs incurred throughout the production process contain to be

explain fully the concept of the cost.how does cost accounting contribute to the effective and efficent management of an industrial established?

Compute the predetermined overhead rate used during the year in the Preparation and Fabrication Departments.

Accounting for Job Order Costing - Direct Materials Direct materials (i) Dr Stores ledger control Account Cr Cash Account - for cash purchasers              X (ii) D