CAS 10 - Direct Material Cost

Question 1

Definition

Answer 1

Expenses relating to manufacture of a product or providing of services which can be directly identified with a cost object other than direct material cost and direct employee cost

Question 2

Principles of measurement

Answer 2

1. Bought out resources - Invoice or agreed price- included- taxes, duties, other exp net of refunds.
2. Self manufactured- DM,DL,DE,POH, AH(prod)paym3. 3. Lump sum payment- ammortised- benefits recvd
3. Element of DE- material- not met- OH

Question 3

General Principles

Answer 3

1. Finance cost is not included
2. Abnormal cost is not included
3. Imputed cost is included ( only materials)
4. Depreciation- based on benefit received
5. Credit or recoveries shall be reduced
6. Subsidy, grant or incentives shall be reduced
7. Penalties ,damages, fines paid to stat auth not cost
8. Cost-standard rates- variance is part of cost

Question 4

Assignment of cost

Answer 4

1. Direct expenses- traceable- cost object-assigned to that cost object

Question 5

Presentation

Answer 5

Direct expenses if material shall be presented as a separate cost head with suitable classification

Question 6

Disclosure

Answer 6

1. Basis of classification
2. Quantity and rates of various elements of DE
3. Abnormal cost is includable
4. Penalties, damages or fines paid to stat authorities
5. Subsidy, grant, incentives recvd is reduced
6. Related party transactions
7. Forex Transactions