Flow of materials the order that materials are issued for use in the factory. The cost of indirect material is treated as one of the cost elements of indirect manufacturing expense. Indirect material indirect material is all other material used in the manufacturing process. Financial accounting, cost accounting and management accounting 1 22 study note 2 material control 2348 study note 3 labor cost computation and control 4988 study note 4 overheads 89118 study note 5 methods of costingjob batch and contract costing 119146 study note 6 process costing 147180 study note 7 joint product and byproducts 181196. It consist its own principles, concepts and conventions which may vary from industry to industry. The prime cost consists of direct materials, direct labour and. The flow of materials does not dictate the flow of costs. If 2 above would materially misstate financial statements, prorate 1, above. Icai is established under the chartered accountants act, 1949 act no. Chapter 2 managerial accounting and cost concepts solutions to questions. Cost accounting is the process of accounting for cost which begins with recording of income and expenditure and ends with the preparation of statistical data.
Icai the institute of chartered accountants of india. Icai the institute of chartered accountants of india set up by an act of parliament. The principles and procedures for controlling and accounting for these cost. The literature indicated that traditional cost accounting information is largely inaccurate for the purpose of decisionmaking, prompting a call for innovation in cost accounting innes and. The total cost comprises of direct costs also known as prime cost and indirect costs known as overheads. Managerial and cost accounting kenyatta university. Close the variance entirely to cost of goods sold for the period. Pdf chapter 2 managerial accounting and cost concepts.