TMI BlogRepairs & Maintenance CostX X X X Extracts X X X X X X X X Extracts X X X X ..... assignment of repairs and maintenance cost, for determination of the Cost of product or service, and the presentation and disclosure in cost statements. Objective 2. The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the repairs and maintenance cost with reasonable accuracy. Scope 3. This standard should be applied to cost statements which require classification, measurement, assignment, presentation and disclosure of repairs and maintenance cost including those requiring attestation. Definitions 4. The following terms are being used in this standard with the meaning specified. 1 [ 4.1 Cost Object: This includes a product, service, cost centre, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a number of periods or seasons under normal circumstances taking into account the loss of capacity resulting from planned maintenance .] 5 [ 4.6 Production overheads: Indirect costs involved in the production process or in rendering service .] The terms Production Overheads, Factory Overheads, Works Overheads and Manufacturing Overheads denote the same meaning and are used interchangeably. Production overheads shall include administration cost relating to production, factory, works or manufacturing. 4.7 Repairs and maintenance cost: Cost of all activities which have the objective of maintaining or restoring an asset in or to a state in which it can perform its required function at intended capacity and efficiency. Repair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce activity shall include cost of materials, consumable stores, spares, manpower, equipment usage, utilities, and other resources used in such activity. 5.3 Cost of repairs and maintenance activity carried out by outside contractors inside the entity shall include charges payable to the contractor and cost of materials, consumable stores, spares, manpower, equipment usage, utilities, and other costs incurred by the entity for such jobs. 5.4 Cost of repairs and maintenance jobs carried out by contractor at its premises shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts (other than cash discount), taxes and duties refundable or to be credited. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1 crore and the value of the existing spare after reconditioning is estimated at ₹ 20 lakhs, the difference of ₹ 80 lakhs should be treated as repairs and maintenance cost. 5.9 The cost of major overhaul shall be amortized on a rational basis. 5.10 Finance costs incurred in connection with the repairs and maintenance activities shall not form part of Repairs and maintenance costs. 5.11 Repairs and maintenance costs shall not include imputed costs. 5.12 Price variances related to repairs and maintenance, where standard costs are in use, shall be treated as part of repairs and maintenance cost. The portion of usage variances attributable to normal reasons shall be treated as part of repairs and maintenance cost. Usa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost statements of an organisation. 6. Assignment of costs 6.1 Repairs and maintenance costs shall be traced to a cost object to the extent economically feasible. 6.2 Where the repairs and maintenance cost is not directly traceable to cost object, it shall be assigned based on either of the following two principles; (i) Cause and Effect - Cause is the process or operation or activity and effect is the incurrence of cost. (ii) Benefits received - overheads are to be apportioned to the various cost objects in proportion to the benefits received by them. 6.3 If the repairs and maintenance cost (including the share of the cost of reciprocal exchange of services) is shared by several cost objects, the related cost shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable. 8.3 Disclosures shall be made in the body of the Cost Statement or as a foot note or as a separate schedule. 8.4 Any change in the cost accounting principles and methods applied for the measurement and assignment of the repairs and maintenance cost during the period covered by the cost statement which has a material effect on the repairs and maintenance cost shall be disclosed. Where the effect of such change is not ascertainable wholly or partly the fact shall be indicated. ----------------------------- Notes:- 1. Adapted from CIMA Terminology. 2. Adapted from CIMA Terminology. 3. Adapted from CAS 1 Para 6.5.13 4. Adapted from CAS 2 paragraph 4.4 5. Adapted from CAS-1 Para 6.3.3 and 6.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
