Sunday, August 17, 2008

elements of cost

Q:- What are main elements of cost ?
1. Direct materials
Material which are present in the finished product or can be identified in the product are called direct materials. For example , cloth in dress making , materials purchased for a specific job etc.
2. Direct labour

Labour which can be identified or attributed wholly to a particular job , product or process or expended in converting raw materials into finished products is called direct labour . For example , labour engaged on the actual production of the product or in carrying out the necessary operation for converting the raw materials into finished product .
3. Direct expenses
It includes all expenses other than direct material or direct labour which are specially incurred for a particular product or process .

4. Indirect material

Material which do not normally form part of the finished product are known as indirect materials .
5. Indirect labour
Labour cost which can not be allocated but can be apportioned to or absorbed by cost units or cost centres is known as indirect labour .
6. Indirect Expenses

Expenses other than direct expenses are known as indirect expenses . Factory rent and rates , insurance of plant and machinery , power , light , heating , repairing , telephone etc.

About Accounting Education

An educational site with 2,000+ articles, solutions, video-guides and tutorials on all topics related to accounting and finance.

Get Update on Mobile

Type in your mobile phone web browser for free access anytime, from any place.The content is designed specifically for cell phones and mobile devices.

Contact Us

Contact us Send an Email Phone number and vCard LinkedIn profile Follow us on twitter