Introduction of Cost Accounting

QUESTIONS:

1.Define profit centre.

Ans: Profit Centre is a part of business accountable for costs and revenues.

2. State the objective of Cost Accounting.

Ans: Objectives of Cost Accounting

The following are the main objectives of Cost Accounting: -

(a) To ascertain the Costs under different situations using different techniques and systems of costing

(b) To determine the selling prices under different circumstances

(c) To determine and control efficiency by setting standards for Materials, Labour and Overheads

(d) To determine the value of closing inventory for preparing financial statements of the concern

(e) To provide a basis for operating policies which may be determination of Cost Volume relationship,

whether to close or operate at a loss, whether to manufacture or buy from market, whether

to continue the existing method of production or to replace it by a more improved method of

production.... etc.

(f) To achieve real and permanent reduction in the unit cost of goods manufactured or services

rendered without impairing their suitability for the use intended or diminution in the quality of the

product.