Cost, Costing, Cost Accounting, Cost Accountancy, Conversion Cost, Differential Cost.

Q1. Write short notes on the following:

  1. Cost
  2. Costing
  3. Cost Accounting
  4. Cost Accountancy
  5. Conversion Cost
  6. Differential Cost.

Ans.

  1. Cost: The amount of expenditure (actual or notional) incurred on or attributable to a given thing.
  2. Costing: The technique and process of ascertaining cost is called costing.
  3. Cost Accounting: It is defined as the process of accounting for cost which begins with the recording of income and expenditure all the bases on which they are calculated and ends with the preparation of periodical statements and reports for ascertaining and controlling costs.
  4.  Cost Accountancy: It is the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and the ascertainment of profitability. It includes the preparation of information derived, for the purpose of marginal managerial decision making.
  5.  Conversion Cost: The cost of transferring raw material into finished product is called conversion cost. It is the total of labor and factory overhead.
  6.  Differential Cost: Increase or decrease in total cost due to increase for decrease in output is called differential cost.

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