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CA Intermediate · Cost & Management Accounting

Introduction to Cost & Management Accounting

Chapter 1 · 3 formulas · 4 exam-critical pointers

Core concepts

  1. 01Cost: expenditure attributable to a cost object.
  2. 02Classifications: by nature (material, labour, expenses), by behaviour (fixed, variable, semi-variable), by function.
  3. 03Direct vs Indirect costs based on traceability.
  4. 04Cost centre (cost), profit centre (revenue & cost), investment centre (return on investment).
  5. 05Cost units differ by industry (per tonne, per ton-km, per bed-day, etc.).

Flowchart

Cost Classification | Nature Behaviour Function | | | Mat/Lab/Exp Fixed/Var/Semi Production/Admin/Selling | Traceability: Direct / Indirect

Exam-critical pointers

  • ⭐Cost = Loss only if no benefit; otherwise it's an asset (deferred).
  • ⭐Period vs Product costs: period (selling, admin) expensed; product (manufacturing) inventoried.
  • ⭐Cost Accounting Standards (CAS-1 to CAS-24) issued by ICAI/ICMAI.
  • ⭐Distinguish cost accounting from financial / management accounting in marks-able theory.

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