“Cost Accounting system is neither unnecessary nor expensive rather it is a profitable
investment”. Discuss. Also, clarify whether direct cost and product cost and indirect cost
and period cost are same and similar concepts.
Answers
Answer:
Management of ABC Ltd.is seeking your advice relating to two of its product X’ and ‘Y’.
’ It sells its product ‘X’ at Rs.15 per unit. In a particular period when company produces and
sells its 80,000 units, it incurs a loss of Rs.5 per unit. If the volume is raised to 2,00,000
units, it earns a profit of Rs.4 per unit. Calculate Break even points of this product both in
terms of rupees as well as in terms of units.
For product ‘Y’ break-even sales level is at Rs.50,00,000. P/V ratio of the product is 20%.
The company now wants to replace the old machinery being used in the production of
product ‘Y’ with new one.This will result in an increase of its fixed cost by 25% though
selling price and variable cost remains unchanged. What should be the percentage increase in
sales for break-even if fixed cost goes up by 25%?
Concept Introduction:-
In the recording through which all the costs which are incurred through a business in such a way that can be used to improve its management.
Explanation:-
Cost Accounting is neither unnecessary nor expensive because as the cost accounting is not a statement and not an expensive nor unnecessary, it is an investment which is profitable because the cost accounting helped the business to determine the cost of the product and manufactured by the business and once its cost is determined then a acceptable mark- up.
Final Answer:-
In the cost accounting its profitable.
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