Lec 29 | ELEMENTS OF COST | COST ACCOUNTS JKSSB FINANCE ACCOUNTS ASSISTANT EXAM | CA MOHAMAD LATEEF

Lec 29 | ELEMENTS OF COST | COST ACCOUNTS JKSSB FINANCE ACCOUNTS ASSISTANT EXAM | CA MOHAMAD LATEEF For notes : Telegram Channel : @eactclasses2 #Cost_Accounting Direct material + Direct labour + Direct expenses = Prime Cost Indirect material + Indirect labour + Indirect expenses = Overheads 1. Materials: - The materials directly contributed to a product and those easily identifiable in the finished product are called direct materials. For example, paper in books, wood in furniture, plastic in a water tank, and leather in shoes are direct materials. Other, usually lower cost items or supporting material used in the production of in a finished product are called indirect materials. For example, the length of thread used in a garment. 2. Labour: - Any wages paid to workers or a group of workers which may directly co-relate to any specific activity of production, maintenance, transportation of material, or product, and directly associate in the conversion of raw material into finished goods are called direct labour. Labour costs which cannot be allocated but can be apportioned to or absorbed by a product are called indirect labour. E.g., salary of supervisor in factory 3. Expenses: - All other expenses, direct or indirect. 4. Overheads: - The aggregate of indirect material costs, indirect labour costs and indirect expenses is termed as Overheads Particulars Amount Direct Material XXX (+) Direct labour XXX (+) Direct Expense XXX Prime cost XXX (+) Factory overhead (Production overhead) XXX Factory cost XXX (+) Office and administration overhead XXX Cost of production XXX (+) Selling and distribution overhead XXX Cost of sales (Total cost) XXX (+) profit/ (loss) XXX Sales XXX