A PROJECT REPORT ON Costing Management Accounting(CMA): Types of Costing System.

Submitted by

As prescribed by the Gujarat Technological University for Second semester

DEPARTMENT OF MASTERS IN BUSINESS ADMINISTRATION DR. J. K. PATEL INSTITUTE OF MANAGEMENT (Affiliated to Gujarat Technological University & recognized by AICTE)

: Acknowledgement:
I am indebted to our Director, Dr. P. G. K. MURTHY and the management of Dr. J. K. Patel institute of management for providing an environment with all facilities that helped me in completing my seminar. I wish to express my sincere gratitude to my seminar guide Prof. Tejal Shah, professor, Department of Masters In Business Administration for her guidance and suggestions. I take this opportunity to convey my gratitude to all teaching and non-teaching staff of the department of Masters in Business Administration for their help. I thank the Almighty for everything and also my parents for their support. There is no doubt. In spite of my efforts there might be errors. I take full responsibility for any lack of clarity or inexactness that may occur.

Types of Costing System:

For a ascertaining the cost, the following types of costing systems are usually used.

1) Uniform costing:
When a number of firms in an industry agree among themselves to follow the same system of costing in detail by adapting common terminology and calculation methods for various items of expenses, they are said to follow a system of uniform costing. In such a case, a comparison of the performance of each of the industry. In such a system, it is also possible to determine the average cost of production of goods for an industry as a whole. It is found to be useful when tax relief, subsidy, or production quota is sought from the Government.

2) Marginal costing:
It is define as the ascertainment of marginal cost by between fixed and variable cost. differentiating

It is used to ascertain the effects of changes in volume or level of output on profit.

3) Standard costing:
It is the name given to the technique where standard costs are predetermined and subsequently compared with recorded actual costs. Therefore, it is a technique which can be used with any method of costing. However, it is specifically suitable where manufacturing methods involve production of standardized goods of repetitive nature. Standard costs can also be used for cost control or as a basis for fixing selling price.

4) Historical costing:
It is the ascertainment of costs after they have been incurred. This type of costing has limited utility in real life.

5) Direct costing:
It is the practice of charging all costs, both variable and fixed, to operations, processes, or products. Unlike marginal costing where fixed costs are excluded, absorption costing takes both variable and fixed costs into consideration.

6) Absorption costing:
It is the practice of charging all costs, both variable and fixed, to operations, processes, or products. Unlike marginal costing where fixed costs are exclude, absorption costing takes both variable and fixed costs into consideration.