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COST MANAGEMENT& MANAGEMENT

CONTROL

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BOOKS:

COST MANAGEMENT:- JAWAHAR LAL

COST MANAGEMENT:- RAVI K. KISHORE

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COST

Amount of expenditure actual or notional

relating to cost object.

Fixed Cost

Variable cost

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ELEMENTS OF COST

DIRECT COST

DIRECT MATERIAL

DIRECT LABOUR DIRECT EXPENSES

INDIRECT COST (OVERHEADS)

INDIRECT MATERIAL

INDIRECT LABOUR

INDIRECT EXPENSES

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FUNCTIONAL CLASSIFICATION

PRIME COST

FACTORY COST

COST OF SALES TOTAL COST OF PRODUCTION

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COST FOR DECISION MAKING

OPPORTUNITY COST- An opportunity cost

is the benefit given up or sacrificed when one

alternative is chosen over another. They arenot recorded in the accounting system as

they are not based on the past payment or

commitments to pay in future.

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SUNK COST: A cost that has already been

incurred. It is a past or committed costwhich is gone for forever. Its a historicalcost.

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RELEVANT COST: Cost which differs between

alternatives. Cost which may also be defined

as the costs which are affected and changedby the decision.

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DIFFRENTIAL COST: It is the difference in

total cost between any two alternatives. It is

the only difference in amount of two cost.

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SHUT DOWN COST: Cost which have to

be incurred under all situations in thecase of stopping manufacture of a

product or closing down a department

or a division.

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CONTROLLABLE &NON CONTROLLABLE

COST: A cost which can be influenced by the

action of a specified member of anundertaking ( Controllable cost) A cost which

cannot be influenced by the action of a

specified member of an undertaking ( Non

controllable)

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MARGINAL COSTING

According to Institute of Cost &Management

Accountants London Marginal Cost

represents the amount of any given volumeof output by which aggregate costs are

changed if the volume of output is increased

by one unit

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For example:

Cost of production of 1000 units =Rs.200,000

Cost of production for 1001 units=Rs.200,150

difference= Rs. 150 (Marginal Cost)

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Decipher this one:

7 I of I Hint

There are also seven books in the set.

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Answer

7 Incarnations of Immortality

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Every now and then you cut my head

Yet I don't complain but obey instead

I am a way for your thoughts and feelings to

be spread

Despite the fact that I am totally dead

A double edged weapon that is easily lead

So don't always believe me: use your head

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Answer

The pencil.

Cut my head: by sharpeningObey instead: write whatever you want

Way for your thoughts and feelings to be

spread: by expressing them through writing

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Can you decipher this phrase?

ch poorri

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Hint

Think Robin Hood.

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Answer

Take from the rich and give to the poor.

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What phrase is shown below?

The Hamburgler Horse RustlersBonnie & Clyde Honor Ali Baba

The Great Train Robbers Billy the Kid

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Answer

Honour amongst thieves