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                  Unit 1:  Introduction to Costing 
                            methods
               Meaning:
                   different procedures followed for the 
               ascertainment and presentation of costs.
                Importance of Costing methods
               1. Help to understand the value of inputs and 
                 outputs in production process.
               2. Helps the management to find the actual 
                 cost per unit of each product.
               3. It helps to find out cost at various stages of 
                 its production.
               4. It reveals the profit and loss of each activity.
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               5. Helps the management to take decisions.
               6. Comparison of performance is possible.
               7. It contributes to the building up of good 
               organizational structure
               8. Efficient communication system.
               9. Avoidance of wastage.
               10. Data are useful to the government.
                           Categories
                1. Specific order costing or Job costing or 
                  Terminal costing
                2. Process or Operation costing
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            1. Job costing –printer, machine tool 
              manufacturers etc
            2. Contract costing- builders, civil engineering, 
              constructional firms etc
            3. Batch costing –buiscuits manufacture, 
              garments, spare components etc
            4. Process costing or average costing- textile, 
              soaps, cement, oil refining
            5. Unit or output costing- mines, quarries, 
              paper mills etc
            6. Service costing – Transport services, gas supply, water 
            supply, hotels etc
            7. Operation costing – the cost of each operation of a 
            process is ascertained. Ex: toy making units, engineering 
            industries, etc
            8. Departmental costing – concerns producing cosmetics, 
            footwear, department stores etc
            9. Form costing- agriculture, poultry farming, nursery etc
            10. Multiple costing- application of more than one 
            method of costing in respect of the same product.
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                         Cost Accounting Standards(CAS)
                         
 Institute of Cost Accounts of India(ICAI) has constituted CASB in the year 
                            2001 with the objective of formulating the cost accounting standards to 
                            Indian industries.
                         
Objectives/ purpose:
                         1.  To codify GACAP as applied in the Indian Industry.
                         1.  To reduce diversities in cost accounting practices
                         2.  To provide a reference source to industry and practitioners in  
                             preparation and attestation of cost statements.
                         3.  To provide a reference source to all stakeholders in understanding and 
                             interpreting  the cost statement
                         4.  To provide a base for monitoring the evolution of new concepts and 
                             practices in cost accounting
                        Applicability:
                        
 Material cost
                        
 Labourcost
                        
 Direct expenses
                        
 Repairs and maintenance cost
                        
 Production overheads
                        
 Depreciation
                        
 Administrative overheads
                        
 Selling and distribution overhead
                        
 Interest and finance charges
                        
 Sales
                        
 Joint costs
                        
 Common costs
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