UNIT / SINGLE OUTPUT COSTING
Where a single item is produced & the final product is homogeneous, the costing method is known as unit/output costing. The cost (P.U) is computed by dividing the total cost by the no.of units manufactured. Examples of industries in which this method is applicable are brick-making, paper mills, cement manufacturing & so on.
Objectives :
(a) To know the total cost of production.
(b) To classify cost under related categories such as prime cost, and work cost.
(c) To determine the effect of each element of cost.
(d) To compare costs during two / more periods.
(e) To determine the tender price on the basis of cost data.
Tenders & Quotations :
A tender is an offer inviting quotations to do certain work. Generally, a manufacturing concern is required to submit a tender/quotation for the prices for the supply of commodities it produces. A tender has to be prepared very carefully as the receipt of orders depends upon the tender supplied by the manufacturers.
The cost sheet which contains detailed information on prime cost, work cost, cost of production & cost of sales is very useful for the preparation of tenders/quotations. While fixing the tender price reasonable percentage of profit is also included. Overheads are calculated as a fixed percentage i.e. works overhead on wages, administration, selling & distribution overhead on works cost basis.
Objectives :
(a) To know the total cost of production.
(b) To classify cost under related categories such as prime cost, and work cost.
(c) To determine the effect of each element of cost.
(d) To compare costs during two / more periods.
(e) To determine the tender price on the basis of cost data.
Tenders & Quotations :
A tender is an offer inviting quotations to do certain work. Generally, a manufacturing concern is required to submit a tender/quotation for the prices for the supply of commodities it produces. A tender has to be prepared very carefully as the receipt of orders depends upon the tender supplied by the manufacturers.
The cost sheet which contains detailed information on prime cost, work cost, cost of production & cost of sales is very useful for the preparation of tenders/quotations. While fixing the tender price reasonable percentage of profit is also included. Overheads are calculated as a fixed percentage i.e. works overhead on wages, administration, selling & distribution overhead on works cost basis.
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