Unit Costing and Tender Price

Content and Description of Course:

Meaning of unit costing

Contents :

1. It is a method of costing used in industry.

2. Where production of single product and continuous production.

3. Total cost and cost per unit of output is ascertained.

4. One of the simplest method of costing.

5. To ascertain the profit or loss on production.

Different methods of cost accounting :

1) Unit costing method

2) Contract costing method

3) Job costing method

4) Process costing method

5) Batch costing method

6) Operating costing method

7) Multiple costing method

8) Departmental costing method

9) Cost plus method

10) Target costing method

Characteristics of Unit Costing

Objectives of Unit Costing

Method of Unit Costing

Calculation of material consumed or Material used

ITEMS NOT TO BE INCLUDED IN COST ACCOUNTS :

[A] Financial Incomes :

i. Dividend and interest received

ii. Rent received

iii. Profit on sale of assets and investments

iv. Share transfer fees

v. Commission received

vi. Dividend received

vii. Brokerage, Commission and Discount Received

viii. Interest on Investment

[B] Financial Expenses :

i. Interest on Debenture

ii. Cash Discount

iii. Interest on capital

iv. Compensation payable to Employees

v. Interest on Loan

vi. Loss on sale of Assets and Investments

vii. Penalties and Fines

viii. Underwriting Commission

ix. Discount on shares and Debenture

x. Expenses on Issue of shares

[C] Appropriation of Profits :

i. Income Tax and Wealth Tax

ii. Dividend Paid

iii. Donations

iv. Preliminary Expenses

v. Transfer to Sinking Fund

[D] Abnormal Items :

i. Abnormal Loss of materials, Labours, and Assets

ii. Abnormal Idle Time

iii. Abnormal Bad Debts

iv. Loss in the Value of Machinery and Plant due to Obsolescence

Statement of Cost

Cost Sheet

Difference between Cost Sheet and Statement of Cost

Tender Price

Contents :

1. Tender statement is a cost sheet 

2. Which shows estimated cost of production

3. And a reasonable amount of profit.

Meaning of Tender Price

Different types of estimated cost sheet for tender price

Types of Overhead :

(A) On the basis of Nature

(B) On the basis of Function

Classification on the basis of Nature

Example of fixed overhead and variable overhead

Example of semi–variable overhead

For better understanding : Practical Problems and Solution, Many Illustration