SQUARE TEXTILES LIMITED

Definition of related terms:

Cost accounting:
Cost accounting involves recording of cost accumulation of cost analyzing of cost and control of cost.

Material Control:
The term Material Control means recognition of function of an organization relating to the procurement, storage and wages of material in such a way as to maintain and even flow of production without excessive investment in material struck.

Material can be classified into two categories:
1. Direct material
2. Indirect material

Elements of cost:

1) Material 2) Labor 3) Overhead

Control of labor:
Cost accountant can decide compiling wages cost prove himself useful by presenting information on matters such as cost of equipment and training, Labor turnover, idle time, over time, shift work labor efficiency, wastage and spoilage due to labor fault and various other analysis related to labor, Control of labor cost is important financial area where the cost accountant can make very useful contribution effective labor cost control may be exercised through: 1) Proper production planning 2) Development of labor time and wages standard and labor budget. 3) Performance report of labor 4) Installation of suitable wage structure and incentive payment and one of the tasks is to co-ordinate these activities and properly advise the executive management to achieve control.

Labor can be classified into two categories:

1. Direct labor
2. Indirect labor

Factory overhead:
Chargeable expenses are those direct costs other than direct material and direct labor. Cost other than materials and wages which are incurred for specific product or saleable services are known as Direct/ Chargeable expenses.

COSTING SYSTEM OF SQUARE TEXTILES LIMITED

Inventory control:
Inventories are valued in accordance with IAS-2 (Inventory) at the lower of