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Cost Accounting Quick Notes - Part 1

Cost accounting involves tracking and analyzing costs for effective budgeting and decision-making. It categorizes costs into fixed, variable, semi-variable, direct, and indirect, and outlines elements of cost such as direct materials and labor. Various costing methods, inventory methods, and concepts like break-even analysis and marginal costing are also discussed.

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13 views2 pages

Cost Accounting Quick Notes - Part 1

Cost accounting involves tracking and analyzing costs for effective budgeting and decision-making. It categorizes costs into fixed, variable, semi-variable, direct, and indirect, and outlines elements of cost such as direct materials and labor. Various costing methods, inventory methods, and concepts like break-even analysis and marginal costing are also discussed.

Uploaded by

lumber jack
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Cost Accounting Quick Notes - Part 1

1. Definition

- Cost Accounting: Tracks, records, and analyzes costs for budgeting, control, and decision-
making.

2. Types of Costs

- Fixed Cost: Constant (e.g., rent)

- Variable Cost: Changes with output (e.g., raw materials)

- Semi-variable: Both fixed & variable (e.g., electricity)

- Direct Cost: Traceable to product

- Indirect Cost: Not traceable (e.g., overhead)

3. Elements of Cost

- Direct Materials

- Direct Labor

- Direct Expenses

- Factory Overhead (indirect factory costs)

4. Prime Cost

Prime Cost = Direct Materials + Direct Labor + Direct Expenses

5. Cost Sheet Summary

Stage | Includes

--------------------------|----------------------------------

Prime Cost | DM + DL + DE

Factory Cost | Prime Cost + Factory Overhead

Cost of Production | Factory Cost + Admin Overhead

Total Cost | Cost of Production + Selling/Dist

6. Costing Methods

- Job Order – Customized jobs


- Process – Continuous production

- Batch – Grouped production

- Contract – Long-term projects

- ABC – Activity-based costing

7. CVP & Break-Even

BEP (units) = Fixed Costs / (Selling Price - Variable Cost)

Contribution Margin = Sales - Variable Costs

8. Inventory Methods

- FIFO – First in, first out

- LIFO – Last in, first out

- Weighted Average – Avg cost per unit

9. Marginal Costing

- Only variable costs are considered

- Fixed costs treated as period cost

- Used for decision-making

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