Elements of Costs
One of the main functions of cost accounting is to classify the costs. Costs may be classified according to its elements. We can distinguish three basic elements in the manufacturing cost of any product or services. They are material cost, labor cost and other overheads.
Material costs – The cost of commodities supplied to an undertaking.
Labor costs – The cost of remuneration of laborers.
Overheads – These are the other expenses incurred.
The expenditure on these various elements of costs may be either direct or indirect. A direct expenditure is one, the whole of which can be conveniently charged to a particular product, job or service whereas an indirect expense is an expense which cannot be identified with any particular product or job. Therefore, such expenses are allocated on suitable basis.
Elements of Costs – Examples and Chart
Examples:
Direct materials - Raw materials used in manufacturing a product.
Indirect materials - Lubricants and cotton waste used in maintaining machinery.
Direct Labor - Wages of those workers who are engaged in production.
Indirect Labor - Wages to those who are aiding manufacturing activities by way of supervision, maintenance, tools setting etc.
Direct Overheads - The cost of special pattern, dyes drawings tools etc. made for specific product.
Indirect Overheads- Office salaries, rent, electricity, advertisement expenses etc.
Elements of Costing at
www.theglobaltutors.com
At www.theglobaltutors.com, we provide Assignment Help/Homework Help and One on One Online Sessions for Elements of costs. Please submit your assignments at “Submit Assignment” Section of our website or send a mail to cs@theglobaltutors.com, mentioning the deadline. If you require online tutoring on elements of costing, send a mail to support@theglobaltutors.com
mentioning your time schedule required. Our tutors are well qualified and well experienced to handle any type of query in cost accounting and its elements.
|
|