Cost Accounting

Cost: The amount of expenditure incurred on to a given thing.
Cost Accounting:  It is thus concerned with recording, classifying, and summarizing costs for determination of costs of products or services planning, controlling and reducing such costs and furnishing of information management for decision making.
Cost Centre: A location, person or item of equipment for which cost may be ascertained and used for the purpose of cost control.
Elements of Cost:  (a) Material (b) Labor (c) Expenses (d) Overheads
Components of Total Costs:.
Prime Cost:  It consists of direct material, direct labor and direct expenses. It is also known as basic or first or flat cost.
Factory Cost:  It comprises prime cost, in addition factory overheads which include cost of indirect material, indirect labor and indirect expenses incurred in factory. This cost is also known as works cost or production cost or manufacturing cost.
Cost of Production:  In office and administration overheads are added to factory cost, office cost is arrived at.
Total Cost:  Selling and distribution overheads are added to total cost of production to get the total cost or cost of sales.
Cost Unit: A unit of quantity of a product, service or time in relation to which costs may be ascertained or expressed.
Methods of Costing : (a) Job costing (b) Contract costing (c) Process costing (d) Operation costing  (e) Operating costing (f) Unit costing (g) Batch costing.
Techniques of Costing: (a) Marginal Costing (b) Direct Costing (c) Absorption Costing (d) Uniform Costing.
Standard Costing: Standard costing is a system under which the cost of the product is determined in advance on certain predetermined standards.
Marginal Costing: It is a technique of costing in which allocation of expenditure to production is restricted to those expenses which arise as a result of production, i.e., materials, labor, direct expenses and variable overheads.