CAS 13- Cost of service cost centre

Question 1

Definition

Answer 1

Cost center which primarily provides auxiliary services across the enterprise

Question 2

Principles of measurement

Answer 2

1. Cost of service cost centre- total of direct and indirect cost related to service provided by service cost centre
2. Cost of inhouse services- valued- cost of all resources including materials,consumable stores,spares, man power, equipment, usage and utilities
3. Cost of services done by outside contractors within the entity shall be valued at payment to contractors plus cost of resources
4. Cost of services done by contractors at their premises valued at invoice price including taxes and duties net of refunds
5. Cost of service- inter unit transfer- valued- DM,DL,DE,POH and DOH
6. Cost of services- inter company transfer- valued- DM,DL,DE,POH,DOH, AOH
7. Cost of service- outside party- DM,DL,DE,POH,AOH,DOH,SOH
8. Cost of production shall be determined based on normal capacity or actual capacity utilization which ever is higher

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- tracability to cost object- econ feasible manner

2. Indirect- most appropriate basis

Question 5

Presentation

Answer 5

If material presented as seperate cost item

Question 6

Disclosure

Answer 6

1. Basis of distribution
2. Std rates, price and usage variances
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