COSTING METHODS - I
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of costing methods in banking and manufacturing firms?
The primary objective is to ascertain the cost of a product, service, or process accurately so that management can make informed decisions on pricing, profitability, and cost control.
What is the main purpose of a cost accounting system in an organisation?
To ascertain cost, control expenditure and aid pricing decisions.
What is Job Costing and when is it used?
Job Costing is a method of costing where costs are collected and accumulated for each specific job, order, or contract separately. It is used when production consists of distinct, identifiable jobs or batches made to customer specifications.
What is a Cost Centre in cost accounting?
A location, person or item for which costs are collected.
How does Batch Costing differ from Job Costing?
In Batch Costing, a group of identical products is treated as a cost unit and costs are accumulated for the entire batch, whereas in Job Costing, costs are tracked for each individual job. The cost per unit is derived by dividing the total batch cost by the number of units in the batch.
What is a Cost Unit in costing terminology?
A unit of product or service for which cost is measured.
What is Process Costing and in which industries is it commonly applied?
Process Costing is a method where costs are accumulated for each process or department over a period of time and then averaged over all units produced. It is commonly applied in industries like chemicals, oil refining, textiles, and food processing where output is homogeneous and continuous.
What are the three elements of cost in cost accounting?
Material, labour and overhead (expenses).
Video classes for this chapter
More chapters in Module D - Taxation and Fundamentals of Costing
Master the full AFM syllabus
Every chapter of Accounting and Financial Management for Bankers — videos, tests, notes and one-liner decks in one place.