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

BRANCHES OF ACCOUNTING BOOK-KEEPINGFINANCIAL ACCOUNTINGCOST ACCOUNTINGMANAGEMENT ACCOUNTING

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.