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Transcript of Paper 3A: Cost Accounting Chapter 6 CA. Dharmendra … · Paper 3A: Cost Accounting Chapter 6 CA....
Paper 3A: Cost Accounting Chapter 6CA. Dharmendra Gupta, FCA
11 • Meaning & Features Of Operating Costing
22 • Applicability of Operating Costing
33 • Costs Classification
44 • Cost Unit in Operating Costing
55 • Absolute & Commercial Tonne Kilometers
66 • Operating Cost Statement
77 • Difference Between Operation & Operating Costing
88 • Examples and Problem
Method of ascertaining the Costs of Providing / Rendering /Operating a service
Also called Service Sector Costing
Adopted By Service Providers
Transport Services
Hospitals
Electricity Supply Companies
Telecommunication Service Providers
Cinemas
Schools
Boiler House
Fixed or Standing Charges
Variable Costs or Running Charges
Semi Variable Costs or Maintenance Costs
• Patient-Days, Room-Days, Operations
Hospitals
• Tonnes , Kilometers, Tonne-kilometers
Goods Transport
• Passenger , Kilometers , Passenger-Kilometers
Passenger Transport
• Number of Ticket or Shows
Cinema House
Absolute Tonne-Kilomete• Sum of Multiplications of Tonnes and
Kilometers
Commercial Tonne-kilometers• Product of Average Tonnes and Total
Kilometers
Operating Cost Statement Of a Bus For a MonthParticulars Rs.
A. Standing ChargesDepreciationRoad TaxInsuranceManager’s SalaryOffice Expenses
B. Maintenance ChargesGarage RentRepairs
C. Operating or Running ExpensesDiesel and OilDriver’s SalaryConductor’ Salary
Grand Total (A+B+C)
Passenger- Kilometers
Cost per Passenger -Kilometer
Operating Costing• Costing of Providing/Maintaining /Rendering Services• No tangible output• Costs are classified on the basis of nature• Cost per service unit is calculated
Operation Costing• Where output of one stage becomes input of other stage• Tangible or measurable output• Costs are classified on the basis of Functions• Cost per unit of output is calculated
Calculate Total passenger-kilometers• Number of Buses -6• Days in a month -25• Trips made by each Bus in a day- 8• Distance (one way) -20 Kms• Capacity of a Bus-40 Passengers• Capacity utilisation -80%
Calculation of Total passenger-kilometers
• No. of Passengers = 40 X 80%=32• Kms by a Bus in a Day= 20 kms X 2 ways X 8 trips
= 320 Kms.• Kms by a Bus in a Month = 25 days X 320 Kms.
= 8000 Kms.• Total Kms. By all 6 Buses= 6 Buses X 8000 Kms.
= 48000 Kms.• Total passenger- kms.= 32 passengersX 48000 Kms.
= 15,36,000 Passenger- Kms.
Commercial tonne- kms. & Absolute tonne-kms
A lorry starts with a load of 20 Tonnes of goods from Station A
It unloads 8 tonnes at Station B and rest of goods at Station C
It reaches back to station A after getting reloaded with 16 Tonnes of goods at Station C
The distance between A to B, B to C and from C to A are 80 Kms., 120 kms. And 160 Kms. Respectively
Absolute Tonne-Kilometers• A to B + B to C +C to A• ( 20 T X 80 Kms) +( 12 T X 120 Kms ) + (16 T X 160 Kms )• 1600 + 1440 + 2560 = 5600 Tonne-Kilometers
Commercial Tonne- Kilometers• Average Load = ( 20 T + 12 T + 16 T )/3 =16 T• Total Distance Covered =80 +120 +160 =360 Kms.• Commercial Tonne- Kms = 16 T X 360 Kms
=5760 Tonne- kms
Analysis of Maintenance cost of two years is given
Year Total Distance MaintenanceRs.
1 1,60,000 4,60,000
2 1,50,000 4,50,000
Segregation of Semi-Variable Costs into Fixed and variable Costs
Variable Cost per Km. = Change in Costs/ Change in Kilometers
• (460,000 – 450,000) / (160,000- 150,000)• Re. 1 per Km
Total Fixed Costs = Total cost – Total Variable Cost ,at any of the levels• At 1,50,000 Kms Level• Total Variable Cost @ Re. 1 = 150,000 X 1 = 150,000• Total Fixed Costs = 450,000 – 150,000 =Rs. 300,000
Total Coal to handled = 24,000 tonnes in a Month
Capacity of a Truck = 10 tonnes
Trips in a Day =5
Days in a Month = 24
Find number of Trucks required?
Capacity of a Truck = 10 tonnes
No. of Trips = 5
Tonnes handled by a Truck in a Day = 10 X 5 = 50
Total Tonnes by a Truck in a Month =50 X 24 Days =1200 Tonnes
No. of Trucks Required = Total Requirement/ Tonnes done by a Truck in a Month
=24,000 / 1200 =20 Trucks
• In this chapter we have discussed
1 • Meaning & Features Of Operating Costing
2 • Applicability of Operating Costing
3 • Costs Classification
4 • Cost Unit in Operating Costing
5 • Absolute & Commercial Tonne Kilometers
6 • Operating Cost Statement
7 • Difference Between Operation & Operating Costing
8 • Examples and Problem
1 • What do you mean by Operating costing?
2 • What are features of Operating costing?
3 • Differenciate Operating & Operation Costing?
4 • What is Absolute and Commercial tonne –kilometer?
5 • What is The Cost unit in different service industry?
6 • How can be classify cost in oparating costing?
7 • What will be % profit in cost, if profit on sales is 25%?
8 • Name some industries where it can be used?