Advanced cost Accounting

          Treatment of certain items : 1. Depreciation 2. Research & development 3. Material losses 1. Depreciation(Accounting standard 6 ) :          Depreciation is the diminution in the value of a fixed asset. Say a machine due to usage & lapse of time. A fixed asset has a  span of life during which it renders services for production purposes till the expiry of the asset. The life of an asset is enhanced by efficient maintenance & reduced by its extensive use. Throughout its life, the machine has been gradually diminishing its value to reach the scrap value at the expiry of its life. The gradual reduction in the value of an asset is called ''depreciation''.             Depreciation thus is the result of two factors - usage & lapse of time. The more the use of an asset the larger the amount of depreciation. Similarly, the use of assets is lower, the smaller the amount of...

     Cost Accounting has been traditionally associated with manufacturing companies. However, in the modern competitive market, cost accounting has been increasingly applied in service industries like banks, insurance companies, transportation organizations, electricity generating companies, hospitals, passenger transport and railways, hotels, road maintenance, educational institutions, road lighting, canteens, port trusts, and several other service organizations. The costing method applied in these industries is known as ‘Operating Costing’.        According to CIMA [London] operating costing is, ‘that form of operating costing which applies where standardized services are provided either by an undertaking or by a service cost center within an undertaking’. Nature of Operating Costing : The main objective of operating costing is to compute the cost of the services offered by the organization. To do this, it is necessary to decide the unit of cost in ...