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Unit & O utput C osting

Unit & O utput C osting. SEMESTER--1. INTRODUCTION. This is a method of calculating cost of production. Generally this method is used in such industries where : The production is continuous, The units of output are homogenous, The cost units are physical and natural to the product, and

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Unit & O utput C osting

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  1. Unit & Output Costing SEMESTER--1

  2. INTRODUCTION • This is a method of calculating cost of production. Generally this method is used in such industries where : • The production is continuous, • The units of output are homogenous, • The cost units are physical and natural to the product, and • The cost per unit is to be known.

  3. Cost sheet • The cost sheet is a document of cost designed to show the total cost and per unit cost of the product in a detailed form.It can be prepared weekly, monthly, quarterly etc. as per the requirement. • Examples of industries where this method is used; • Coal industry, Textile industry, Brick-making industry, Cement industry etc.

  4. OBJECTIVES OF UNIT COSTING • To ascertain the total cost and per unit cost of products after a definite period. • To know the proportion of each component in total cost such as prime cost, works cost, cost of production. • To make comparative study of costs of any two periods of a product in order to control the cost. • To estimate the selling price of the product in order to acquire a desired level of profit. • To ascertain the tender price of a work to be done.

  5. Advantages of cost sheet • We can have knowledge of the total cost and per unit cost of units produced . • It helps in determining selling price of the production. • It helps to keep control over cost of production through a comparative study of the cost of any two periods. • It helps to ascertain the tender price of a work which is to be done in future.

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