Learn with Steem : TUTORIAL CLASS NO:2 SCOPES, OBJECTIVES AND SIGNIFICANCE OF COST ACCOUNTING||Welcome to the classes of Cost and Accounting by @Monz122 || club75

Hello everyone

This is Monz from India hope you people are doing great and enjoying your days happily. I am back with my second tutorial classes of Cost Accounting. Last class we learnt about the Branches of Accounting and got a brief introduction about Financial Accounting.

Today we will be learning about the significance and objectives of cost accounting we will also get to know about the scope of Cost Accountancy and I hope from each lecture of mine you are getting some ideas and knowledge . So now let's start with today's topic.

Cost Accounting

Cost accounting can be defined as analysis of expenditure and it is also used for classifying the costs . A process of accounting with starts with recording income and expenditure and ends with giving out the statistical data prepared . Cost Accounting helps in disclosing the exact total cost constituted and it also helps the management by providing information for proper planning decision making and control.

Cost accounting provides informations like efficiency of an employee , plant & machinery and other items stocks etc. Cost accounting helps in reducing and controlling the costs and also provide suitable data and information and is also useful for price fixation purposes.

Scopes of Cost Accounting

•Cost Control : it regulates the actions to keep the elements of costs within limitations.

•Analysis of Cost: it locates the factors responsible for the difference in actual cost from budgeted costs which helps in taking strategic decisions.

• Ascertainment of Cost: finding out the cost of the product and also the services rendered with accuracy is the main objective of Cost Accounting.

•Cost Reports: generally cost reports are prepared for the use of different management at different levels . It helps in managerial decision making and also in planning and control.

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Objectives of Cost Accounting

The main objective of cost accounting is reduction and ascertain of costs using different techniques of costing. It also helps in depicting the selling price under different circumstances. It determines the cost and volume relationship. It also helps in determining the control efficiency by setting the standards for materials overheads and labours hence it becomes easy to calculate the actual cost of the product.

Advantages of Cost Control

• productivity of the available resources get increased.
• provides economic growth and stability.
• increased job opportunities for workers.
• helps in maximizing profits by achiving the expected return on capital employed.
• increases credit worthiness.

There are three elements of Costs:

1) Material 2) Labour 3) Overhead Expenses

•Material Costs are the costs of material used in production. Example of material costs are; freight charges , taxes duties and cost of raw materials.

• Labour Costs are costs which includes payment of employees be it temporary or permanent labour . Example are; salaries wages which includes facilities like PF , incentives and gratuity.

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•Overhead Expenses can be considered as ongoing expenses other the material and labour which cannot be identified conveniently . Example of overhead expenses are ; marketing & sales , repairs and maintenance costs of business vehicles and machineries.

Next comes the cost which can be further classified into:
Direct Expenses and Indirect Expenses

• Direct Expenses are those expenses which the business incurs directly like raw material , freight expenses, commissions etc. Whereas indirect are not directly involved in the business but are necessary to run the business these expenses cannot be traced as they can be in the form of ongoing expenses like repace ,maintenance etc.

So friends that's all for today's class. Next class we will be learning about Direct Expenses and Indirect Expenses . We will also learn to make cost sheet data and learn about different types of budget under cost accounting. If you have any doubts regarding the chapter do ask me in the comment section.

10% payouts to @steemindiaa

Thank you everyone and have a great day ahead!