Cost Accounting Essay

Submitted By singhmik
Words: 3081
Pages: 13

Cost accounting was first introduced in manufacturing organizations to determine product cost for pricing purposes and for valuation of inventory required to determine profits at the end of each accounting period.
In accounting, costs are the monetary value of expenditures for supplies, services, labor, products, equipment and other items purchased for use by a accounting entity. Cost accounting information is commonly used in financial accounting information, but first we are concentrating in its use by managers to take decisions. The accountants who handle the cost accounting information generate add value by providing good information to managers who are taking decisions
Direct costs
Consultation fees and money spent on investigations and drugs were classified as medical expenditure. Money spent on travel, lodging, special food and expenditure incurred for persons accompanying the patient were classified as nonmedical expenditure.
Indirect costs
Indirect costs were classified as loss of wages due to illness, decreased earning ability due to illness, or long term disability that necessitated change in type of work.
Total cost
Total cost includes the expenditure incurred pre treatment and during treatment under direct and indirect costs. The cost was calculated in terms of Indian rupees.

Below Poverty Line is an economic benchmark and poverty threshold used by the government of India to indicate economic disadvantage and to identify individuals and households in need of government assistance and aid. It is determined using various parameters which vary from state to state and within states. The present criteria are based on a survey conducted in 2002.
The World Bank's definition of the poverty line**, for under developed countries, like India, is US$ 1/day/person or US $365 per year. As per this definition, more than 75% of all Indians are, probably, below the poverty line!
As per the Government of India, poverty line for the urban areas is Rs. 296 per month and for rural areas Rs. 276 per month, i.e. people in India who earn less than Rs. 10 per day. As per GOI, this amount will buy food equivalent to 2200 calories per day, medically enough, to prevent death. At this level of earning, even in a poor country like India, survival on Rs. 10 per day is a nightmare! This actually translates to Rs. 3650 per year or US $ 75 per year.
The minimum wages in India, vary from state to state and city to city, and average Rs. 1000 - 1250/month or Rs. 12,000 - 15,000/yr. Or US $ 250 - US $ 300/yr. India's per capita is US $ 440 per year. (China's is US $ 990).
The Socio Economic Survey conducted during 2002 was based on 13 Socio economic indicators (enlisted by Government of India ) indicating the quality of life and by Score based ranking for all households. Each of the indicators have 0-4 marks. Thus for 13 indicators, the tentative marks obtained by the families are from 0-52 for all the Districts. The Supreme Court of India in Writ Petition No. 196/2001 filed by People's Union for Civil Liberties, the result of Below Poverty Line census 2002 need not be finalized. Later in October, 2005 the Government of India informed that based on the advice given by the Additional Solicitor General, it has been decided to finalize the results of Below Poverty Line Census 2002 without deleting the Below Poverty Line families already existing in the Below Poverty Line list of Below Poverty Line Census 1997 and to follow the following procedure for finalization of Below Poverty Line list.
1. Preparation of Below Poverty Line list
2. Approval in Gram Sabha
3. Appeal to Block Development Officer and Collector.
4. Display of Final List
The Government of India then decided that the Below Poverty Line list for 2002 could be finalized as per original guidelines. The Director of Rural Development and Panchayat Rajstated that in the Below Poverty Line survey done in 1991 out of 84.33 lakh Rural families 34.46 lakh