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Cost of Utilities

CAS - 08 - Companies Law - CAS - 08 - CAS - 8 The following is the COST ACCOUNTING STANDARD - 8 (CAS-8) issued by the Council of The Institute of Cost and Works Accountants of India on "". In this Standard, the standard portions have been set in bold italic type. This standard should be read in the context of the background material which has been set in normal type. 1. Introduction 1.1 This standard deals with the principles and methods of determining the . 1.2 This standard deals wit .....

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uding those requiring attestation. 3.2 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. 3.3 This standard shall not be applicable to the organizations primarily engaged in generation and sale of utilities. 3.4 This standard does not cover issues related to the ascertainment and treatment of carbon credits, which shall be dealt w .....

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stomer or distribution channel or any other unit in relation to which costs are ascertained.] 4.4 Finance Costs: Costs incurred by an enterprise in connection with the borrowing of funds. This will include interest and commitment charges on bank borrowings, other short term and long term borrowings, amortisation of discounts or premium related to borrowings, amortisation of ancillary cost incurred in connection with the arrangements of borrowings, finance charges in respect of finance leases, ot .....

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king into account the loss of capacity resulting from planned maintenance.] In case of any standby utility the normal capacity will be the same as actual production of the utility. The normal capacity of a utility meant for captive consumption would be based on the normal capacity for the production facility of the end product of the consuming unit. 4.7 Standard Cost: A predetermined cost of resource inputs for the cost object computed with reference to set of technical specifications and effici .....

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ity created to safeguard against the failure of the main source of inputs. 5. Principles of measurement 5.1 Each type of utility shall be treated as a distinct cost object. 5.2 purchased shall be measured at cost of purchase including duties and taxes, transportation cost, insurance and other expenditure directly attributable to procurement (net of trade discounts, rebates, taxes and duties refundable or to be credited) that can be quantified with reasonable accuracy at the time of acquisition. .....

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st and share of administrative overheads. 5.3.4 generated for the sale to outside parties shall comprise direct material cost, direct employee cost, direct expenses, factory overheads, distribution cost, share of administrative overheads and marketing overheads. The sale value of such utilities will also include the margin. 5.4 Finance costs incurred in connection with the utilities shall not form part of . 5.5 The shall include the cost of distribution of such utilities. The cost of distributio .....

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e reduced for ascertainment of the cost to which such amounts are related. 5.9 The cost of production and distribution of utilities shall be determined based on the normal capacity or actual capacity utilization whichever is higher and unabsorbed cost, if any, shall be treated as abnormal cost6. Cost of a Stand-by Utility shall include the committed costs of maintaining such a utility. 5.10 Any abnormal cost where it is material and quantifiable shall not form part of the . 5.11 Penalties, damag .....

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e would result in a more appropriate preparation or presentation of cost statements of an organisation. 6. Assignment of costs 6.1 While assigning , traceability to a cost object in an economically feasible manner shall be the guiding principle. 6.2 Where the is not directly traceable to cost object, it shall be assigned on the most appropriate basis. 6.3 The most appropriate basis of distribution of cost of a utility to the departments consuming services is to be derived from usage parameters. .....

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