Cost Accounting Standards | CMA Inter Syllabus

Table of contents

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Cost Accounting Standards (CAS 1 to CAS 24)

The maintenance of cost records was introduced by the Companies amendment bill 1965 through section 209 (1) (d) which warrants:

“Every company shall keep at its registered office proper books of account with respect to: in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilization of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account.”

The primary objective to introduce cost accounting records was to veer the corporate sector to be more efficient. The scheme was intended to serve the best interest of the companies and all its stake holders. This was explained and documented in a few joint select committee reports and parliamentary debate for Company Amendment Bill 1965, while incorporating section 209 (1) (d) (Cost Accounting Records) and 233B (Cost Audit). After the aforesaid amendments, the Government notified Cost Accounting Record Rules for 44 Industries.

Expert Committees

There were various committees formed to evaluate the need & implementation of Cost Records maintenance. The brief on recommendation made by these committees ae given below:

1. Expert Committee chaired by Dr J J Irani, set up by Ministry of Corporate Affairs, said that Cost Records are important instruments that would enable companies make their operations efficient and exist in their competitive environment.
2. Committee on Subordinate Legislation (Fourteenth Loksabha) in its first report (Chapter 3) stated as follows:
   1. Authentic cost database is of paramount importance to various existing new regulatory bodies, competition commission and Government Departments for fixation of user charges in respect of services provided by them and would go a long way in fulfilling their respective objectives
   2. In the present scenario authentic Cost database is not only essential for the industries to improve upon their performance and face competitive environment but is useful for various Government agencies,revenue authorities, regulatory bodies, banks and Financial Institutions for meeting their respective objectives.
   3. Service sector such as banking, insurance, health services, education, hotels etc. have admitted by “attained strategic importance to the economy and the public at large, particularly after opening up of the economy for private or foreign companies.”
3. . Standing Committee on Finance in its report on the Companies Bill 2009, emphasized on the mandatory maintenance of cost records, coverage of more number of companies particularly sectors covering exploration, mining, processing, manufacturing, infrastructure and utilities under cost audit and due compliance with the cost accounting standards and cost auditing standards.

Cost Accounting Record Rules 2011

Keeping in views the aforesaid recommendations of the committees Government introduced the cost accounting record rules 2011 with the broader scope of working. Highlights of these rules are as under:

1. Detailed definition of the Manufacturing Activity, Mining Activity & Processing Activity is added in the rules.
2. The definition of product included idea, know how, method, information & service. So for the first time service industry was covered under the purview of Cost Records maintenance.
3. The applicability of the rules linked to 3 criteria:
   1. Aggregate net worth of the Company – ₹ 5 crore & above
   2. Total Turnover – ₹ 20 Crore & above
   3. Shares / securities are listed in any stock exchange in or outside Indi.
4. Every company which is required to maintain cost records, shall submit the compliance certificate duly certified by a practicing cost accountant with in prescribed time limit & prescribed format.

Cost Accounting Record Rules 2014

Presently, Section 148 of the Companies Act, 2013 read with companies (Cost Records and Audit) Rules, 2014 and Companies (Cost Records and Audit) Amendment Rules, 2014 deal with provisions relating to maintenance of Cost Records.

Companies to which maintenance of cost records is applicable are divided into two categories viz. Table A (Regulated Sectors) and Table B (Non-regulated Sectors). The rules prescribe an exhaustive list of industries / sectors / products / services, which need to prepare cost records, along with their respective CETA headings. Cost Records are made mandatory across all of these industries wherein overall annual turnover from all its products and services during the immediately preceding financial year exceeds ₹ 35 crores. Requirement of Compliance Certificate has been dispensed with.

Cost Accounting Standards

The Cost Accounting records rules set by the government for the industries deal with the various items of cost and the way in which they have to be reported in the Cost Statement in accordance with the cost accounting principles. Since there were no Generally Accepted Cost Accounting Principles, these were left to be understood by each company or by each cost accountant, as they understand or with reference to the explanations given in various textbooks on the subject.

This led to adoption of practices with a lack of uniformity in preparation and presentation of cost statements. To promote uniformity, there was an urgent need to integrate harmonize, and standardize the cost accounting principles and practices. Therefore, the Generally Accepted Cost Accounting Principles have been clearly defined and well documented in the form of the Cost Accounting Standards.

Advantage of Cost Accounting Standards:

1. Providing a structured approach to measurement of cost in manufacturing process or service industry;
2. Integrating, harmonizing, and standardizing cost accounting principles and practices;
3. Providing guidance to users to achieve uniformity and consistency in classification, measurement, assignment, and allocation of costs to products and services;
4. Arriving at the basis of computing the cost of product, activity, or service where required by legal or regulatory bodies;
5. Enabling practicing members to make use of Cost Accounting Standards in the attestation of General Purpose Cost statements; and
6. Assisting in clear and uniform understanding of all the related issues by various user organizations, government bodies, regulators, research agencies, and academic institutions.

ICMAI has brought out 24 Cost Accounting Standards so far, which is discussed in the later part of this module.

Cost Accounting Standards Board

Composition of the Board

The council of the Institute of Cost Accountants of India, has constituted ‘Cost Accounting Standards Board’ (CASB) with the objective of formulating Cost Accounting Standards, after recognizing the need for structured approach to the measurement of cost so as to provide guidance to the user organizations, government bodies, regulators, research agencies, academic institutions and others to achieve uniformity and consistency in classification, measurement and assignment of costs.

The composition of the CASB will be broad based and ensure participation of all interest groups in the standard setting process. The chairman of the CASB will be nominated by the council of the Institute. The following will be represented on the CASB :-

1. Six members of the Council including the Chairman of the Board to be nominated by the Council.
2. A nominee of the Central Government representing Ministry of Corporate Affairs.
3. Adviser (Cost), Cost Audit Branch, or his representative nominated by Ministry of Corporate Affairs, Government of India.
4. A nominee of the Central Government representing the Central Board of Indirect Taxes and Customs, Government of India.
5. A nominee of the Central Government representing the Central Board of Direct Taxes.
6. Two members of the Institute representing leading companies.
7. Four nominees from regulators i.e. CAG, RBI, SEBI, IRDA,TRAI...etc.
8. Two nominees from professional Institutions i.e. ICAI and ICSI.
9. Three nominees of Industry Associations viz ASSOCHAM, CII, FICCI....etc.
10. Two nominees from academic Institutions like IIM, MDI, Universities...etc.
11. Four eminent practicing members of the Institute.
12. President is authorized to include a maximum of two eminent persons having knowledge and expertise in the Cost and Management Accounting / Accounting Standards not falling under the categories as defined in the constitution.

Objectives and Functions

The objectives of the CASB are to develop high quality Cost Accounting Standards to enable the management to take informed decisions and to enable regulators to function more effectively by integrating, harmonizing and standardizing Cost Accounting Principles and Practices.

The following will be the functions of the CASB :-

1. To issue the framework for the Cost Accounting Standards.
2. To equip the Cost & Management Accounting professionals with better guidelines on Cost Accounting Principles.
3. To assist the members in preparation of uniform cost statements under various statutes.
4. To provide from time to time interpretations on Cost Accounting Standards.
5. To issue application guidance relating to a particular standard.
6. To propagate the Cost Accounting Standards and to persuade the users to adopt them in the preparation and presentation of General Purpose Cost Statement.
7. To persuade the Government and appropriate authorities to enforce Cost Accounting Standards, to facilitate the adoption thereof, by industry and corporate entities in order to achieve the desired objectives of standardization of Cost Accounting Practices.
8. To educate the users about the utility and the need for compliance of Cost Accounting Standards.

Overview of Cost Accounting Standards

In the following table, an overview of the 24 CASs are presented along with the respective objectives of the standards

CAS No.	Title	Objective
CAS 1	Classification of Cost	For preparation of Cost Statements.
CAS 2	Capacity Determination	To bring uniformity and consistency in the principles and methods of determination of capacity with reasonable accuracy.
CAS 3	Production and Operation Overheads	To bring uniformity and consistency in the principles and methods of determining the Production or Operation Overheads with reasonable accuracy.
CAS 4	Cost of Production for Captive Consumption	To determine the assessable value of excisable goods used for captive consumption.
CAS 5	Average (Equalized) Cost of Transportation	To determine averaged / equalized transportation cost
CAS 6	Material Cost	To bring uniformity and consistency in the principles and methods of determining the Material Cost with reasonable accuracy in an economically feasible manner.
CAS 7	Employee Cost	To bring uniformity and consistency in the principles and methods of determining the Employee Cost with reasonable accuracy
CAS 8	Cost of Utilities	To bring uniformity and consistency in the principles and methods of determining the Cost of Utilities with reasonable accuracy.
CAS 9	Packing Material Cost	To bring uniformity and consistency in the principles and methods of determining the Packing Material Cost with reasonable accuracy.
CAS 10	Direct Expenses	To bring uniformity and consistency in the principles and methods of determining the Direct Expenses with reasonable accuracy.
CAS 11	Administrative Overheads	To bring uniformity and consistency in the principles and methods of determining the Administrative Overheads with reasonable accuracy.
CAS 12	Repairs and Maintenance Cost	To bring uniformity and consistency in the principles and methods of determining the Repairs and Maintenance Cost with reasonable accuracy.
CAS 13	Cost of Service Cost Centre	To bring uniformity and consistency in the principles and methods of determining the Cost of Service Cost Centre with reasonable accuracy
CAS 14	Pollution Control Cost	To bring uniformity and consistency in the principles and methods of determining the Pollution Control Costs with reasonable accuracy.
CAS 15	Selling and Distribution Overheads	To bring uniformity and consistency in the principles and methods of determining the selling and Distribution over- heads with reasonable accuracy.
CAS 16	Depreciation and Amortisation	To bring uniformity and consistency in the principles and methods of determining the Depreciation and Amortisation with reasonable accuracy.
CAS 17	Interest and Financing Charges.	To bring uniformity and consistency in the principles, methods of determining and assigning the Interest and Financing Charges with reasonable accuracy.
CAS 18	Research and Development Costs	To bring uniformity and consistency in the principles and methods of determining the Research and Development Costs with reasonable accuracy and presentation of the same.
CAS 19	Joint Costs	To bring uniformity and consistency in the principles and methods of determining the Joint Costs.
CAS 20	Royalty and Technical Know- How Fee	To bring uniformity and consistency in the principles and methods of determining the amount of Royalty and Technical Know-how Fee with reasonable accuracy.
CAS 21	Quality Control	To bring uniformity, consistency in the principles, methods of determining and assigning Quality Control cost with reasonable accuracy.
CAS 22	Manufacturing Cost	To bring uniformity and consistency in the principles and methods of determining the Manufacturing Cost of excisable goods.
CAS 23	Overburden Removal Cost	To bring uniformity and consistency in the principles and methods of determining and assigning Overburden Removal Cost with reasonable accuracy.
CAS 24	Treatment of Revenue in Cost Statements	To bring uniformity and consistency in the principles and methods for treatment of revenue in cost statements with reasonable accuracy.

*Limited Revision 2017 [CAS 6, 7, 8, 9, 10, 11, 12, 13, 14, 16, 17, 20, 21, 22, 23 & 24]

Each of the Cost Accounting standards has been explained in brief below.

CAS – 1: COST ACCOUNTING STANDARD ON CLASSIFICATION OF COST

This standard deals with the principles of Classification of Cost for determining the cost of a product or service.

Objective

The objective of this standard is to bring uniformity and consistency in the principles of Classification of Cost for disclosure and presentation in the cost statements of a product or service.

Scope

This standard shall be applied to cost statements, which require classification, presentation and disclosure of cost including those requiring attestation.

Principles of Classification of Costs

Costs shall be classified by the process of grouping the components of cost under a common designation on the basis of similarities of nature, attributes or relations. Items grouped together under common heads shall be further classified according to their fundamental differences.

Scheme of classification shall be such that every item of cost is classified.

Classification of Costs

1. By Nature of expenses
2. By nature of traceability to a cost object
3. By function
4. By nature of behaviour
5. By nature of production or operation process

CAS – 2: COST ACCOUNTING STANDARD ON CAPACITY DETERMINATION

This standard deals with the principles and methods of determining the capacity of a facility for producing goods or providing services by an entity. This standard deals with the principles and methods of classification and determination of capacity of an entity for ascertainment of the cost of product or service, and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determination of capacity with reasonable accuracy.

Scope

This standard shall be applied to the cost statements, including those requiring attestation, which require determination of capacity for assignment of overheads.

Determination of Capacity:

Capacity shall be determined in terms of units of production or services or equivalent machine or man hours.

1. Installed capacity:

Installed capacity is usually determined based on:

1. Technical specifications of facility
2. Technical evaluation
3. Capacities of individual or interrelated production or operation Centres
4. Operational constraints or capacity of critical machines or equipment
5. Number of shifts or machine hours or man hours.

2. Normal Capacity:

Normal capacity is determined after suitable adjustments to the Installed Capacity.

The adjustments may be of the following nature:

1. Time lost due to scheduled preventive or planned maintenance
2. Number of shifts or machine hours or man hours
3. Holidays, normal shut down days, normal idle time
4. Normal time lost in batch change over.

CAS-3: COST ACCOUNTING STANDARD ON PRODUCTION AND OPERATION OVERHEADS

This standard deals with the principles and methods of determining the Production or Operation Overheads. This standard deals with the principles and methods of classification, measurement and assignment of Production or Operation Overheads, for determination of the cost of goods produced or services provided and for the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Production or Operation Overheads with reasonable accuracy.

Scope

This standard shall be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Production or Operation Overheads including those requiring attestation.

Disclosures

The cost statements shall disclose the following:

1. The basis of assignment of Production or Operation Overheads to the cost objects
2. Production or Operation Overheads incurred in foreign exchange
3. Production or Operation Overheads relating to resources received from or supplied to related parties
4. Any Subsidy, Grant, Incentive or any amount of similar nature received or receivable reduced from Production or Operation Overheads
5. Credits or recoveries relating to the Production or Operation Overheads
6. Any abnormal cost not forming part of the Production or Operation Overheads
7. Any unabsorbed Production or Operation Overheads

Disclosures shall be made only where material, significant and quantifiable.

CAS-4: Cost Accounting Standard on Cost of Production for Captive Consumption

Cost Accounting Standard 4 (CAS-4) was issued to specify the principles for determination of cost of production for valuation of goods meant for captive consumption, as required under the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000. CBEC, vide circular No. 692/8/2003-CX dated 13-2-2003 had clarified that in case of captive consumption, cost calculation should be as per CAS-4 only.

With the introduction of Goods and Services Tax [GST] with effect from July 1, 2017, the concept of ‘captive consumption’ is no more relevant for computing the tax incidence. However, the concept of cost of production or manufacture is relevant under the GST laws where the value of supply of goods or services or both are determined based on cost.

Objective

The objective of this Standard is to bring uniformity and consistency in the principles and methods of determining the cost of production or acquisition or supply of goods or provision of services as required under the provisions of GST Acts/Rules.

Scope

This standard should be applied to cost statements which require classification, measurement, assignment, presentation, and disclosure of related costs for determination of the following under the relevant provisions of GST Acts/Rules.

1. Determination of cost of production of goods;
2. Determination of cost of acquisition of goods;
3. Determination of cost of supply of goods;
4. Determination of cost of provision/supply of services; and
5. Determination of value of supply of goods or services as per open market value or as per goods or services of like kind and quality.

CAS-5: Cost Accounting Standard on Determination of Average (Equalized) Cost of Transportation

The cost accounting principles for tracing/identifying an element of cost, its allocation/apportionment to a product or service are well established. Transportation Cost is an important element of cost for procurement of materials for production and for distribution of product for sale. Therefore, Cost Accounting Records should present transportation cost separately from the other cost of inward materials or cost of sales of finished goods. The Finance Act 2003 also specifies the certification requirement of Transportation Cost for claiming deduction while arriving at the assessable value of excisable goods cleared for home consumption/ export. There is a need to standardize the record keeping of expenses relating to transportation and computation of Transportation Cost.

Objective

1. To bring uniformity in the application of principles and methods used in the determination of averaged/equalized transportation cost
2. To prescribe the system to be followed for maintenance of records for collection of cost of transportation, its allocation/apportionment to cost centres, locations or products
3. To provide transparency in the determination of cost of transportation

Scope

This standard should be applied for calculation of cost of transportation required under any statute or regulations or for any other purpose. For example, this standard can be used for :

1. Determination of average transportation cost for claiming the deduction for arriving at the assessable value of excisable goods
2. Insurance claim valuation
3. Working out claim for freight subsidy under Fertilizer Industry Coordination Committee
4. Administered price mechanism of freight cost element
5. Determination of inward freight costs included or to be included in the cost of purchases attributable to the acquisition
6. Computation of freight included in the value of inventory for accounting on inventory or valuation of stock hypothecated with Banks / Financial Institution ...etc.

CAS-6: Cost Accounting Standard on Material Cost [Limited Revision 2017]

This standard deals with principles and methods of determining the Material Cost. Material for the purpose of this standard includes raw materials, process materials, additives, manufactured / bought out components, subassemblies, accessories, semi finished goods, consumable stores, spares and other indirect materials. This standard does not deal with Packing Materials as a separate standard is being issued on the subject.

This standard deals with the principles and methods of classification, measurement and assignment of Material Cost, for determination of the Cost of product or service, and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Material Cost with reasonable accuracy.

Scope

This standard should be applied to Cost Statements which require classification, measurement, assignment, presentation and disclosure of Material Costs including those requiring attestation.

CAS-7: Cost Accounting Standard on Employee Cost [Limited Revision 2017]

This standard deals with the principles and methods of determining the Employee Cost. This deals with the principles and methods of classification, measurement and assignment of Employee Cost, for determination of the cost of product or service and the presentation and disclosure in Cost Statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Employee Cost with reasonable accuracy.

Scope

This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Employee Cost including those requiring attestation.

CAS-8: Cost Accounting Standard on Cost of Utilities [Limited Revision 2017]

This standard deals with the principles and methods of determining the Cost of Utilities. This deals with the principles and methods of classification, measurement and assignment of Cost of Utilities, for determination of the cost of product or service and the presentation and disclosure in Cost Statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Cost of Utilities with reasonable accuracy.

Scope

This standard shall be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Cost of Utilities including those requiring attestation.

For determining the cost of production to arrive at an assessable value of excisable utilities used for captive consumption, Cost Accounting Standard 4 on Cost of Production for Captive Consumption (CAS 4) shall apply. This standard shall not be applicable to the organizations primarily engaged in generation and sale of utilities. This standard does not cover issues related to the ascertainment and treatment of carbon credits, which shall be dealt with in a separate standard.

CAS-9: Cost Accounting Standard on Packing Material Cost [Limited Revision 2017]

This standard deals with the principles and methods of determining the Packing Material Cost. This deals with the principles and methods of classification, measurement and assignment of Packing Material Cost, for determination of the cost of product, and the presentation and disclosure in Cost Statements. Packing Materials for the purpose of this standard are classified into primary and secondary packing materials.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the packing material cost with reasonable accuracy

Scope

This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Packing Material Cost including those requiring attestation.

CAS-10: Cost Accounting Standard on Direct Expenses [Limited Revision 2017]

This standard deals with the principles and methods of determining the Direct Expenses. This deals with the principles and methods of classification, measurement and assignment of Direct Expenses, for determination of the cost of product or service, and the presentation and disclosure in Cost Statements.

Objectives

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Direct Expenses with reasonable accuracy.

Scope

This standard should be applied to Cost Statements, which require classification, measurement, assignment, presentation and disclosure of Direct Expenses including those requiring attestation.

CAS-11: Cost Accounting Standard on Administrative Overheads [Limited Revision 2017]

This standard deals with the principles and methods of determining the Administrative Overheads.

This deals with the principles and methods of classification, measurement and assignment of Administrative Overheads, for determination of the cost of product or service, and the presentation and disclosure in Cost Statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Administrative Overheads with reasonable accuracy.

Scope

The standard should be applied to Cost Statements, which require classification, measurement, assignment, presentation and disclosure of Administrative Overheads including those requiring attestation.

CAS-12: Cost Accounting Standard on Repairs and Maintenance [Limited Revision 2017]

This standard deals with the principles and methods of determining the Repairs and Maintenance Cost.

This deals with the principles and methods of classification, measurement and assignment of Repairs and Maintenance Cost, for determination of the cost of product or service, and the presentation and disclosure in Cost Statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Repairs and Maintenance Cost with reasonable accuracy.

Scope

The standard should be applied to Cost Statements, which require classification, measurement, assignment, presentation and disclosure of Repairs and Maintenance Cost including those requiring attestation.

CAS-13: Cost Accounting Standard on Cost of Service Cost Centre [Limited Revision 2017]

This standard deals with the principles and methods of determining Cost of Service Cost Centres. This covers the service cost centre and excludes utilities and repair & maintenance costs dealt with in CAS - 8 & CAS 12 respectively. This standard deals with the principles and methods of classification, measurement and assignment of Cost of Service Cost Centre, for determination of the cost of product or service, and the presentation and disclosure in Cost Statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Cost of Service Cost Centre with reasonable accuracy.

Scope

The standard should be applied to the preparation & presentation Cost Statements, which require classification, measurement and assignment, of Cost of Service Cost Centres including those requiring attestation.

CAS-14: Cost Accounting Standard on Pollution Control Cost [Limited Revision 2017]

This standard deals with the principles and methods of determining Pollution Control Cost. This deals with the principles and methods of classification, measurement and assignment of Pollution Control Costs, for determination of the cost of product or service, and the presentation and disclosure in Cost Statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Pollution Control Costs with reasonable accuracy.

Scope

The standard should be applied to Cost Statements, which require classification, measurement, assignment, presentation and disclosure of Pollution Control Costs including those requiring attestation.

CAS-15: Cost Accounting Standard on Selling and Distribution Overheads

This standard deals with the principles and methods of determining the Selling and Distribution Overheads.

This deals with the principles and methods of classification, measurement and assignment of Selling and Distribution Overheads, for determination of the cost of sales of product or service, and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Selling and Distribution Overheads with reasonable accuracy.

Scope

This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Selling and Distribution Overheads including those requiring attestation.

CAS -16 : Cost Accounting Standard on Depreciation and Amortisation [Limited Revision 2017]

This standard deals with the principles and methods of determining Depreciation and Amortisation Cost.

This deals with the principles and methods of measurement and assignment of Depreciation and Amortisation for determination of the cost of product or service, and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Depreciation and Amortisation with reasonable accuracy.

Scope

This standard shall be applied to cost statements which require measurement, assignment, presentation and disclosure of Depreciation and Amortisation, including those requiring attestation.

CAS-17 : Cost Accounting Standard on Interest and Financing Charges [Limited Revision 2017]

This standard deals with the principles and methods of determining Interest and Financing Charges.

This deals with the principles and methods of classification, measurement and assignment of Interest and Financing Charges.

Objective

The objective of this standard is to bring uniformity and consistency in the principles ,methods of determining and assigning the Interest and Financing Charges with reasonable accuracy.

Scope

This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Interest and Financing Charges including those requiring attestation. This standard does not deal with costs relating to risk management through derivatives.

CAS -18 : Cost Accounting Standard on Research and Development Costs

This standard deals with the principles and methods of determining Research and Development Cost. This deals with the principles and methods of determining the Research, and Development Costs and their classification, measurement and assignment for determination of the cost of product or service, and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Research, and Development Costs with reasonable accuracy and presentation of the same.

Scope

This standard should be applied to cost statements that require classification, measurement, assignment, presentation and disclosure of Research, and Development Costs including those requiring attestation.

CAS-19 : Cost Accounting Standard on Joint Costs

This standard deals with the principles and methods of determining Joint Cost.

The deals with the principles and methods of measurement and assignment of Joint Costs and the presentation and disclosure in cost statement.

Objective

The objective of this standard is to bring uniformity, consistency in the principles, methods of determining and assigning Joint Costs with reasonable accuracy.

Scope

The standard shall be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Joint Costs including those requiring attestation.

CAS-20 : Cost Accounting Standard on Royalty And Technical Know-How Fee [Limited Revision 2017]

This standard deals with the principles and methods of determining the amount of Royalty and Technical Knowhow Fee.This deals with the principles and methods of classification, measurement and assignment of the amount of Royalty and Technical Know-how Fee, for determination of the cost of product or service, and their presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the amount of Royalty and Technical Know-how Fee with reasonable accuracy.

Scope

This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of the amount of Royalty and Technical Know-how Fee including those requiring attestation.

CAS-21 : Cost Accounting Standard on Quality Control [Limited Revision 2017]

The standard deals with the principles and methods of measurement and assignment of Quality Control cost and the presentation and disclosure in cost statement.

Objective

The objective of this standard is to bring uniformity, consistency in the principles, methods of determining and assigning Quality Control cost with reasonable accuracy.

Scope

The standards shall be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Quality Control cost including those requiring attestation.

CAS – 22 : Cost Accounting Standard on Manufacturing Cost [Limited Revision 2017]

This standard deals with the principles and methods of determining the Manufacturing Cost of excisable goods.

This deals with the principles and methods of classification, measurement and assignment for determination of the Manufacturing Cost of excisable goods and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Manufacturing Cost of excisable goods.

Scope

This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Manufacturing Cost of excisable goods.

CAS – 23: Cost Accounting Standard on Overburden Removal Cost [Limited Revision 2017]

The standard deals with the principles and methods of measurement and assignment of Overburden Removal Cost and the presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity, consistency in the principles, methods of determining and assigning Overburden Removal Cost with reasonable accuracy.

Scope

The standard shall be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of Overburden Removal Cost including those requiring attestation.

CAS – 24: Cost Accounting Standard on Treatment of Revenue in Cost Statements [Limited Revision 2017]

This standard deals with the principles and methods of classification, measurement, treatment and assignment of revenue and its presentation and disclosure in cost statements.

Objective

The objective of this standard is to bring uniformity and consistency in the principles and methods for treatment of revenue in cost statements with reasonable accuracy.

Scope

This standard shall be applied to cost statements which require classification, measurement, treatment, assignment, presentation and disclosure of revenue including those requiring attestation.

 

Exercise

A. Theoretical Questions:

Multiple Choice Questions

1. CAS 21 stands for: 
   A. Capacity Determination 
   B. Joint Cost
   C. Direct Expenses
   D. None of these.
2. CAS 13 is dealt with ________ .
   A. Joint Cost 
   B. Interest and financing charges 
   C. Employee Cost 
   D. Cost of Service cost centr
   
   
3. Which standard deals with the principles and methods of determining the manufacturing Cost of excisable goods?
   A. CAS 2 
   B. CAS 12 
   C. CAS 15 
   D. CAS 22
   
   
4. Which standards deals with determination of averages/ equalized transportation cost?
   A. CAS 5 
   B. CAS 6 
   C. CAS 9 
   D. CAS 22
   
   
5. Which standards deals with the principles and methods of determining depreciation and amortization cost?
   A. CAS 9 
   B. CAS 12 
   C. CAS 15 
   D. CAS 16

Answer:

1

D

2

D

3

C

4

D

5

D