CAS 1 - Classification of cost

Question 1

Definiton of cost

Answer 1

Cost is the measurement in monetary terms the amount of resources used in the manufacture of product or provision of service

Question 2

Definition of cost centre

Answer 2

1. Any unit of an entity selected with a view to accumulate all costs under the unit
2. A unit may refer to a department, division , section m group of plant and machinary group of employees or combination of any.

Question 3

Types of cost centres

Answer 3

1. Personal and Impersonal

2. Impersonal- Operating and Support service

Question 4

Definition of cost unit

Answer 4

Form a measurement of volume of production or service
Power- MW
Cement - MT
Automobile- Nos
Transportation - Tonne-Kms

Question 5

Classification of cost

Answer 5

1. Nature of expense
2. Nature of tracability
3. Function
4. Behaviour
5. Production or Operating Process

Question 6

Presentation

Answer 6

1. Cost items in the cost statement shall be present according to relavent classification
2. The classification of cost shall be followed consistently from period to period

Question 7

Disclosure

Answer 7

1. Any classification of cost shall not be disclosed unless disclosure is required as per law OR CAS or it changes the presentation of cost element on cost statement
2. It material, classification of cost shall be disclosed