NIKUNJ (NIL) (131 Points)16 April 2016
Mritunjay Kumar Sinha
Replied 19 June 2016
|Originally posted by : NIKUNJ|
|what is the main difference between cost of utility cas 8, cost of overhead cas 3 and cost of direct expence cas10|
CAS 8: Discuss about the cost of utility, which essentially means the utilities (like power among different other things), used for manufacturing, where such utility is being used captively (using the utility for manufacturing purpose which could have been sold by the concern otherwise)
CAS 3: Overhead comprises: Indirect Material, Indirect Labour and Indirect Expenses. Like salary paid to supervisor, for supervising the project. Here supervisor is not direct labour, hence the salary paid to supervisor shall be accounted as overhead.
CAS 10: Direct Expenses: expenses which can be attributed to product OTHER than direct material and direct labour cost ( because these 2 costs are already included in PRIME COST). Like for Manufacturing, there may be use of die, royalty paid for using know how and all, which can be traced to the product and directly linked with cost of manufacturing. Hence these costs are termed as direct expenses.