Costing

Cost: The amount of expenditure incurred or two attainable a specified thing or activity.

Costing:  The technique and process of ascertaining cost is known as casting.

Cost accounting: is the method of accounting for total cost and per unit cost of product, service order, job, process. Cost comprises are three element material labour, expense.

Cost accountancy: is the application of costing and cost accounting principles, method, and technique to the science art and practice of cost control and the ascertainment of profit ability. 

Type and techniques of cost accounting:

1. Historical costing: the ascertainment of cost after they have included.

2. Standard costing: the preparation and use of standard cost and the analyses and variances to the causes and point of incidents.

3. Marginal cost: is a technique to ascertain the effect of profit by the change volume of out by the change in type of output.

4. Direct cost: and variable cost such as direct material and direct labour and variable manufacturing expensive are expels of cost are change to the product.

5. Absorption costing: the practice of charging all costs both variable and fixed to operations, process or product.

6. Uniform costing: the use by various undertaking of the same costing principle or practise.

Meaning of Account: the record of all economic reinjection or monetary reinjection is called an account.

Accounting: the techniques or process to maintain the accounts is called accounting.

Cost accounting: cost accounting is the technique and process of ascertainment of cost.

Cost accountancy: cost accounting is the application of costing and cost accounting principle, methods and techniques for control of profitability

Method of costing: 

Specificoder: job costing, control costing, batch costing, target costing.

Continuous operation: Process costing, single or output costing, operation costing, depart material costing, composite or multiple costing.

Job costing: Job costing method is a system of costing in which cost are ascertaining on terms of specific job or order which are not comparable with each other and non repetitive.

Contract costing: is a costing method which applies where work is executed under customer’s specific requirements and each order is of long duration which cover may go into various accounting year.

Batch costing: in this costing method a batch of similar products is treed as a job. Cost are collected and analysed according to batch member and the cost are as contained batch wise.

Target costing: In this method before commencement of job the cost of work is estimated with the help of experts. This estimated cost is termed as target cost. The contractor is termed as commission at a certain percentage on the total cost.

Continuous operation costing: 

Process costing: is application to those industries which manufacture a number of units of output requiring processes here an articles or producing process is treated as a raw material for the coding till completion.

Single or output costing: this method is used where the production is uniform and consists of only a single product. The cost is ascertained per unit of output. The unit’s are identical to each other and are the standard once. This method is applied to industrial like mining, flourmills, steel work.

Operation costing: is generally, trimmed as conversion cost. I.e. cost of labours and variable overhead used in converting the shape of raw material.

Departmental costing: is applicable where the cost of department on a cost under is required to be as certain, there the total cost of department is divided by the total units manufactured in the that department to know the cost of per units of the output.

Composite or multiple costing: where more than one method is used in conjunction the method become a multiple costing method, in this production radio, TV, motor car, computer etc.

A variety of component some base don one method and other on a different method of costing are produced and then assembled, since more than one method of costing is applied, the method in such a case is know by name of multiple costing.

Element of cost: 

Material cost: is the cost of commodities supplied to an under taking. Material cost is of two types:

1. Direct cost: which can be identified with and allocated to cost centre and cost unit.

2. Indirect cost: which can not allocated but which can be apportioned to are absorbed by cost centre and cost unit.

Labour cost: is the cost of remigration of the impolyes and undertaking.

1. Direct cost: which can be identified with and allocated to cost centre and cost unit.

2. Indirect cost: which can not allocated but which can be apportioned to are absorbed by cost centre and cost unit.

Expanses cost: As the third element of cost mean’s the expanses other than material and labour. Expanses are two types. 

1. Direct cost: which can be identified with and allocated to cost centre and cost unit.

2. Indirect cost: which can not allocated but which can be apportioned to be absorbed by cost centre and cost unit.

Over head:- may be referred is the cost of industry material and indirect laber and such other exercises which cannot be conventionally change direct to specific centre and cost unit.

Classification of over hand:-

1. Factory over head, Office and administrate over head, Selling and distribution overhead.

2. Rent, power, lighting and electricity, depilation of plant.

3. Staff salary accountant, directors.

4. Seles manager salary, combination, advertisement combination to salesman.

Marginal costing:- refer to variable cost. Variable cost consists of direct materials, direct laber, variable direct expenditure and all variable overhands. According to I.C.M.A (Instate of cost management of account of London) Marginal cost is the amount at any given aggregate cost are changed if the volume of output is increased or decreased by one unit.

Marginal cost:- is the costing method which changes the product with only those cost that very directly with volume. According to D.Joseph => Marginal costing is a technique of determine of the amount of change in aggregate the cost due to increases in one unit over the existing level of the production.

Basic characteristics of marginal costing:- Technique of cost analysis and presentation, Division of cost in variable and fixed cost, Valuation of stock, Determination of price, calculation of price, calculation of profit, breakeven analysis. 

Breakeven point= TR=TC   Max. Profit=TR-TC

Assertion of marginal costing: - All the element of cost can be divided into fixed variable components.

Assertion:- Total variable cost changes in prop ration to the volume output.

Per unit selling price remains constant at all level of opening activity.

Total fixed cost remains unchanged at all level of output.

In case of production in addition present level only variable cost is increases at (incurred) addition cost.

Advantage of marginal costing: Easiness, Proper valuation of closing stock, Meaningful margerial reporting, Convenience in computing fixed cost, Helpful in marginal design and making.

Limitations of marginal costing:  Difficulty in division of cost, ignoring the time element, Problem of valuation of stock, Not suitable for all concern, Inappropriate basic of pricing.

Standard costing:- is a process and technique of accounting in which actual cost are compared to with pre determined cost on the basic of comparison, efficiency of operation is determined and neceserary consecutive measures are taken if there are some variances. Standard costing is a technique of accounting which compass the standard cost of each product or surveys with the actual cost to determine the efficiency of operation so that any remedial action may be taken immediately.

Advantages of standard costing: In the view of cost accounting elimination of the weakness of historical costing. Simple and economic. Cost control. Comparability and basic of valuation of stock. Motivational advantage – cost consciousness, measurement & increase in efficiency. Managerial effectives – Facility in production planning.

Limitations of standard costing:- Unsuitable for concern dealing in un-standardised product. Differ cult in salting up of standards. Not suitable for small concern. Diffculty in fixing of reopen suability. Changing business conditions. Feeling of dissatis faction among employs.

Application of standarded costing:- Can be adapted not only in manufacturing interests but also in enterpriser offering services. Standard costing which commonly used in those incrusts which are producing standarding product. Essential candidates for effective standard costing: - 

1. Proper determination of standards. According to technical process. Simplicity and clarity. Application of standard costing: can be adopted not only in manufacturing incrusts but also in enterpriser offering services.

2. Standard costing which commonly used in those inductors which are producing standarding product.

3. Proper determination of standards, According to technical process.

Simplicity and clarity, Promptness in variance analysis.Proper interest by management, Production of standardised goods.

4. Standards of different element of goods.

Type of standard:

Basic standards: are also known as initial, static or fixed standard. These standards are based on the data of sum base year. And are determine as a base for a long period. Variances calculated on the basic of basic standards do not reflect the current feature.

Current standards: are stabilised on the basis of current conditions and are modified according to the change conditions.

Ideal standard: is based on working under the most favourable conditions and high level of efficiency. The standard is fixed on the abjection that all conditions are fever able and the management is at its best position.

Expected standard: This standard is based on expected conditions, its means the standard which can be achieved during ascertain budget period. It is known as attainable or practical standard is setting up this standard reasonable allowance is made for normal wastage and due to consideration is given to expected condition of work and plant.

Normal standard: is one which is nighters very high very low. And it established keeping in view the seasonal and cyclical fluctuations. Such standard are fixed on the basis of average estimated performance over future period of time say five year covering one trade cycle.

Methods of determine standard:

Direct material: The flowering two standards in respect of direct material:

a) Determation of standard quality of material.

b) Determation of standard price of material.

In ascertaining standard quantity of material, product design in developed and standard specification of material are determine. The normal wastage of material is also fixed on the basis of past recode.

Direct labour: Standard of direct labour is also involves two standards.

1. Classification of labour into different grads and Determation of their labour hour for each product.

2. Determation standard rate of wages for different grads of workers.

Over head: Overhands are divided into two parts.

1. Fixed overheads are set easily on the basis at past record while variable expenses are fixed on unit or hour basis.

2. Variable overhead.

Different b/w standard & historical costing:

1. Record and determination: Standard cost is determine before actual performance, while actual cost is determined and record after the actual performance.

2. Relationship with efficiency: Historical cost indicates the total cost of product or service on it has no relationship with efficiency, while standard costing provides an important basic for the measurement and valuation of efficacy.

3. Ideal and reality: Standard cost is a target of an ideal cost attainable under a set of normal condition, while historical cost is reality.

4. Compulsion: Historical cost is compassion, while standard costing is optional.

Difference of standard cost & estimated cost:

1. Nature of cost: Standard cost lies emphasis as, “What the cost should be”. While estimated cost indicates,’ what they will be.’

2. Basis of determination: Estimated costs are based on historical accounting, while standard cost are determine on the basic of syntific analysis. Keeping in view certain of efficiency.

3. Objective: The main objectives of standard cost are control of cost and magerment of efficiency, while estimated cost are used for fixed selling.

4. Accuracy: standard cost is a cost based on scientific method and it is more accurate and reliable, while estimated cost system is less accurate and reliable.

Difference of standard costing & budgetary control:

1. Calculation: Budgets are prepared of estimate and expected cost’s, while standard cost is a plane cost, based on scientific analysis.

2. Income and expenditure: Budget’s are prepared for income and expenditure, while standard cost is related with production and production cost is related.

3. Relationship with account’s: Budgetary control is related mainly to finical account’s, while standard costing is related mainly to cost accounts.

4. Variance analysis: Budgetary control deals with total variance only, while in standard costing variance are calculated for each element’s of cost.

Inventory control: may be define as planning, ordering and scheduling of material used in manufacturing process.

Requirement of material control:

1. Proper coordination and cooperation.

2. Centralised purchasing, Scheduling.

3. Inspection of material.

4. Economy in purchasing and use.

5. Well planned storage of material.

6. Proper records and accounting.

Methods of Inventory controls:

1. Budgetary techniques for inventory planning.

2. Selective inventory control.

3. Economic order quantity (E.O.Q)

4. Techniques to determine the various.

5. Limits/ level of Inventory.

6. Perpetual inventory system and the system of store verification.

A.B.C:- Used to check material, A.B.C are the grades of material.

A: Cost high, used less.

B: No high prise, used medium.

C: Higher quality and price low.

V.E.D:- Vital essential desirable.

V: Production activity stops in less that.

E: Production activity not stops in less that.

D: Production activity standard maintain no effect continuously production.

H.M.L:- High material cost,

M: Motrate material cost.

L: Low material cost.

F.S.N:- Fast moving, Slow moving, Non-moving.

Entrepreneur ship: The concept of entrepreneur is a agent who buys factor or production and certain prices in order to combine them into a product with a view to selling at uncertain prices in future. Entrepreneur ship is the process of identify opportunity in the place, marshalling the recourses required to pursue this opportunity is and in vesting the resources to exploit the opportunities for long term gamer (profit).

Quality of a success entrepreneur:

1. Initiation.

2. Watching for opportunities.

3. Information seeker.

4. Quality conscious.

5. Commitment at work.

6. Self confidence.

7. Paper planning.

Leadership: is the process of influencing the behaviour and work of other in group offered to words the realization of specified goals in a given situation.

Function of leadership:  Setting gols, Organising, Motivation, Coordination, Representation, Control

1. He acts as a guide of his followers by setting the main goals of his group.

2. He shapes the corrector of the group shows the ways and leads it to words the goals.

3. He establishes motivational system that enables people to meat both orginational and personal goals. 

4. His main task to develop voluntary cooperation and to foster mutual understanding and term work.

5. A leader represents the group to his superiors and pears.

6. The leader maintains order and dissilience and creates positive response on the part of member of group.

Role and importance of leadership: 

1. Providing Inspiration to employs.

2. Securing cooperation.

3. Creation of confidence.

4. Providing conducive environment.

5. Building higher morale.

6. Facilitation of change.

Type of leader: 

1. Intellectual leader: who wins the confidence of their followers by their superior knowledge; he may be purchase spas list a production expert or advertigment spa list. 

2. Democratic leader: is one who according to the wishes of the followers. He does what the group wants.

3. Autocratic leaders: Such leaders prefer the use of powder in per noting their hands they never likes to delicate their power from the fear that take may loss their authority in this way.

4. Persuasive leader: Under the followers to join him and doing the things what is want. The followers have full confidence on him.

5. Creative leader: Uses the technique of circular response to uncrage to flow the group to him as well as him to group.

6. Institutional leader: hold his position because of force o prestige attached to his office. The position he hold unable him to in flagrance his followers because of respect for the position.

Style of leader ship: 

1. Auto critic leader ship: It is also known as directive style of leadership. This autocratic leader gives orders which must be obeyed by the subordinates, he centralise design making power in him. He takes design for the grow without consulting the group members.

2. Participative: A democratize is one how given Oder after carding to the group. He sass to that pollicises is with the acceptance of group. His designs are arise after the coronation the group.

3. Free rain leadership: Does not leave but leaves the group and truly the free rain manager avoid using powder. He depends largely upon the group to establish. It’s on goes and workout it’s on problems. Group member work them self and motivate each other.

4. Skill of leadership: Visionary skills, sensitivity, communication skills, self-awareness.

Communication: may be defined as interchange of thought or information b/w two or more parsion to bring about mutual understanding.

Theo haiman: combination is the process of passing information and understanding from parsion to another it is the process of in parting ideas and making oneself understand by others.

Principle of effective commutation: Speed, clarity of message, creation of impression. Creation of feedback, accuracy, secrecy, safety and two way commutations.

Process of communication: 

Sender or communicator => massage => Encoding

ʎ y

         Feedback <=Decoding <= Receiver 

Barriers to effective communication: structural, status, perceptual, language, unqualified assumption, resistance to change, Inattention, Recur of time.

Remove barriers: Message should be clear and concise. Use familiar word and language. Receiver should pay-proper attention. Eligibility and feedback. To way communication.

Motivation: is something that moves the persion to action and continues him in the course of an action already in shirted.

Emc for land: refers the way in which urges, drives, desires, aspirations need direct, control and explain the behaviour of human beings.

Theory for land: (Given by mas low) (Need Hierarchy theory)

Herzberg two factor theory: Found that responses could be groups within two gernal categories which is called hygiene and motivators. Hygine factor includes ways, fringe benefits, physical conditions and overall company poly administration etc. The presence of this factor at a satisfactory level prevents job, dissatisfy faction. But does not provide motivation to the employs. So they are conversed as hygiene Maintence factor. On the other hand motivational factor are essential are for increasing the productivity of impolyes. They are also known as satisfiers and include such factor as recognition, achievement, advancement, responsibility etc.

McGregor’s theory: Two parts are: Theory X, theory Y. 

The average human being has a nihereut dislike of work and will avoid it if he can.

The average human being prefer to be direct wish avoid to responsibility, such as relatively little ambitions wants security above all. It advocates carets and strike approach to motivation of workers. Workers have to be persecuted and pushed into performance. If the works obey the order they will get ways otherwise they will be pushed out the job. 

Theory: 

 The average human being does not in her eutly dislike work.

External control and the reat of punishment are not the only means for binging about effort to words organizanal objective.

The human being learns under proper conditions not only to accept but also to sack responsible. 

Ochis theory: willian ochi made a comparative study of American and Japanese management practice. He can to the calculate that many of the Japanese management parties can be adopted in the American contacted. He suggested the adoption of theory Z. It describes human behaviour as in the case of theory X and Y.

1. Mutual trust: When trust and openness exist b/w employs, workgroup, and management conflict is reduced to the minimum and impolyes courtly fully to active the organisational objectives.

2. Strong bond B/w Company and employs: Theory Z suggests life time employment in the company as followed in Japan. Retrenchment layoff should be avoided as per as possible. The need of the workers must be sanctified.

3. Employee involvement: In related mater’s improves. There comment and performance.

4. Human recourse development: The management must work to develop new skills among the employs. Technical training research and development also emphasized.

5. Roll of leader: The leader roll should be cording the effrontery of human being in order to develop common culture and class filling in the organization. For this purpose emphasizes should be mutual trust and cooperation.

Financial motivation/ incentive financial: These include wages and salaries, bonus and insurance, medical allowance, housing facilities, retirement benefits. They are paid in terms of many. It is gernally said that higher these benefits higher are the productivity of the works.

Non financial motivation: Cannot be measured in terms of money. They are concerned with the satisfaction of social and theological needs of the employs. Non motivation incentive includes the following: State, job security, performance feedback, praise, and opportunity for growth.

Attitude: is a prides position to response negative way to someone or something in one’s environment for exp. When a person says that like or dislikes someone attitude is being expressed.

Component of attitudes: The information components consist of beliefs, value, ideas, and other informance a persion has about the object. The emotional component involves the person filling or effect positive, natural and negative about an object. Behaviour component consists of the tendency of a persion to behaviour in a particular meaner towards an object.

Personality traits influencing organisational behaviour: Authoritarianism: More emphases on rule and regulation.

A with authoritianism strong belief of stablished machmisum of formal a thirty views obedient of a throaty. They naturally prefer stable and structure work invorments which are government clear rules and procurer.

Machiavellianism: The characteristics of high “Mach” employs are follows. The high mach is pragmatic, maintains emotional distance and believes that ends can justify means.

1. They manculatiwin more and preservation more than low matches

2. They flouries when the interact face to face other writher then in directly.

3. They are successful when the salutation as the minimum no of rules the regulations.

Introversion and extroversions: Extra words are sociable and indivisible while in roves are shy quit and retiring. Extroverted are more suitable for positions that required considerable interaction with others. Where assert rovers are more incline to excel at tasks. They required through and analytical skill.

Locus of control: means whither people believe that they are control of events and event’s control them. Those who have internal locus of control believe that they can control and shop the control and events in there life’s. Those who have external locus of control tend to believe that event events occur of control.

1. They have greater control over there behaviour.

2. Such people are more active in seeking information to make dision.

3. Internal’s are more active socially.

External are show the trades:

1. Such people are less sacrificed with there job, have higher absents rates. They gernally directly prefer manager.

2. These people prefer chance oriented trades.

3. They are more intersection job security and not in advancement in curer’s.

Preeption: by which individual receive information about is environment by selling, hearing, feeling, tasting, and smelling.

Perceptual mechanism: 

1. Section:

Internal

1. Need and desires.

2. Experience.

3. Learning.

External

1. Size.

2. Intensity

3. Frequency

4. Status

5. Contrast

6. Familiarity

Organisation

1. Figure and ground

2. Similarity

3. Proximity

4. Clasaune

Interpretation

1. Effect and action

Stereotype: Open sheens from such aspects of diversity are race, grander age, physical abilities, oblique qualities social background and occupation stereo type result from the nature of our information processing tendencies.

Holo effects: it refer to the tendency of perusing people in terms of good and bad and scribing all good qualities tonne who is liked and all bed qualities to another who is dislike. The halo problem cam is minimized by supervisory training.

Projection: The un conscious tendency to assign our triads, motives, believes and attitudes to other is called projection.

Self serving bias: is the tendency to overestimate extreme case of behaviour and under estimate internal once. The attribution carror is the tendency to over astimate internal cause of behaviour and under astimate external once when jading other people behaviour.

Reducing perceptual errors: One has to keep in mind the way the perceptual process work. One can compare one perception with other people if they are representing deferent back grounds cultures and training, this made lead to agreement. One should understand other person point of view it may help of to know when one is wrong.