Professional Documents
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On
Costing
OVERVIEW
Accounting is a part of the information system of a
business enterprise. It provides financial information
concerning the activities of an enterprise to a diverse
group of people such as shareholders, managers,
creditors, tax authorities etc.
On the basis of the purpose for which this information
is used, accounting is divided into three parts.
1. Financial Accounting
2. Management Accounting
3. Cost Accounting
Financial Accounting
Costing
According to CIMA London has defined costing as
“ the techniques and process of ascertaining the
costs”.
Applications of Cost Accounting
Objectives of Cost Accounting
• Ascertainment of costs
• Cost control and cost reduction
• Guide to business Policy
• Determination of selling price
COST CENTRE
According to CIMA London as “ a location, person, or item
of equipment (or group of these) for which costs may be
ascertained and used for the purpose of control”.
Cost centres are primarily of 2 types
• Personal Cost centre
• Impersonal cost centre
From a functional point of view
• Production cost centre
• Service cost centre
Cost Unit
According to CIMA London defined cost unit as a “ unit
of product or service in relation to which costs are
ascertained”.
In short, cost unit is unit of measurement of
cost.
Types of cost units
• Units of production
• Unit of service
Cost Object