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Manufacturing cost

CAS - 22 - Rule - Companies Law - CAS - 22 - CAS - 22 Cost Accounting Standard on The following is the COST ACCOUNTING STANDARD - 22 (CAS - 22) issued by the Council of The Institute of Cost Accountants of India for determination of "". 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 .....

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gnment, presentation and disclosure of of excisable goods. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal and non-recurring cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/or due to some abnormal situation of the production or operation. 4.2 Administrative Overheads: Cost of all activities relating to general management and administration of an organisation. Administrative overheads need to be .....

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division or unit of the same organization or related undertaking for manufacturing another product(s), as defined in section 4(3) of the Central Excise Act, 1944. 4.4 Defectives: End Product and/or intermediate product units that do not meet quality standards. This may include reworks or rejects. An intermediate product is a product that might require further processing before it is saleable to the ultimate consumer. 4.4.1 Reworks: Defectives which can be brought up to the standards by putting i .....

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nd market changes. Depreciation does not include impairment loss. Depreciation is allocated so as to charge a fair proportion of the depreciable amount in each accounting period during the estimated useful life of the asset. Depreciable amount of a depreciable asset is its historical cost, or other amount substituted for historical cost in the financial statements, less the estimated residual value. Useful life of asset is either (i) the period over which a depreciable asset is expected to be us .....

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future payments for the services rendered by employees of an enterprise (including temporary, part time and contract employees). Consideration includes wages, salary, contractual payments and benefits, as applicable or any amount paid or payable on behalf of employee. This is also known as Labour Cost. 4.7.1 Direct Employee Cost: The cost of employees which can be attributed to an excisable good in an economically feasible way. 4.7.2 Indirect Employee Cost: The cost of employees which cannot be .....

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ost, Cost of Inputs received free of cost or received at concessional value from the buyer of the excisable good, Depreciation and Amortisation (including amortisation cost of free tools, patterns ,dies, drawings, blue prints, technical maps, charts, engineering, development, art work, design work, plans, sketches, packaging material and the like necessary for production of excisable goods), Cost of Rework, reconditioning, retro-fitment, Manufacturing Overheads, other costs allocable to such act .....

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s shall include administration cost relating to production, factory, works or manufacturing and depot. Manufacturing Overheads shall be classified on the basis of behaviour as Variable Manufacturing Overheads and Fixed Manufacturing Overheads. Variable Manufacturing Overheads comprise of expenses which vary in proportion to the change in volume of production. For example, cost of utilities etc. Fixed Manufacturing overheads comprise of expenses which does not change with the change in volume of .....

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final product (h) goods used for providing free warranty for excisable goods Cost of material consumed consists of cost of material, duties and taxes, freight inwards, insurance and other expenditure directly attributable to procurement. Trade discount, rebates and other similar items are deducted for determining the cost of materials. Cenvat credit, credit for Countervailing Customs Duty, Sales Tax set off, VAT, duty draw back and other similar duties subsequently recovered/recoverable by the e .....

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enses incurred relating to quality control activities for adhering to quality standard. These expenses include salaries & wages relating to employees engaged in quality control activity and other related expenses. 4.15 Repairs & 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. 4.16 Research and Development Cost: The research and develop .....

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process. 4.19 Technical Know-how Fee: Technical Know-how Fee is a lump sum or periodical amount payable to provider of Technical Know-how in the form of design, drawings, training of personnel, or practical knowledge, skills or experience. 4.20 Waste and Spoilage: 4.20.1 Waste: Material lost during production or storage due to various factors such as evaporation, chemical reaction, contamination, unrecoverable residue, shrinkage, etc., and discarded material which may or may not have any value. .....

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st shall be measured separately for each type of material, that is, for indigenous material, imported material, bought out components and process materials, self-manufactured items, accessories for each type of excisable good. Cost of Inputs received free of cost or at concessional value from the buyer of the excisable good shall be considered for determination of . 5.4 The material cost of normal scrap/defectives which are rejects shall be included in the material cost of excisable goods manufa .....

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onsumed for manufacturing of excisable good shall be measured for each type of utility. 5.7 Packing material cost used for each type of excisable good shall be measured separately. If excisable goods are transferred/dispatched duly packed, the cost of such packing shall include cost of all types of packing in which the excisable goods are removed from the place of removal. 5.8 The Direct Expenses for manufacturing of excisable goods shall be measured for each excisable good separately. 5.9 Repai .....

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case the manufacturing process generates scrap or waste, realized or realizable value net of cost of disposal, of such scrap and waste shall be deducted from the cost of Joint Product. 5.13 Royalty and Technical Know-how Fee for manufacturing of excisable goods paid or incurred in lump-sum or which are in the nature of 'one-time' payment, shall be amortised on the basis of the estimated output or benefit to be derived from the related Technical Know-how. Royalty paid on sales shall not f .....

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uring Overheads for excisable goods representing procurement of resources shall be determined at invoice or agreed price including duties and taxes, and other expenditure directly attributable thereto net of discounts; taxes and duties refundable or to be credited as input credit. Manufacturing Overheads other than those referred to above shall be determined on the basis of cost incurred in connection therewith. 5.16 Any abnormal cost, where it is material and quantifiable, shall not form part o .....

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ning, retro-fitment, Manufacturing Overheads and other costs allocable to such activity, adjustment for stock of work-in-process and recoveries from sales of scrap and wastages and the like necessary for production of excisable good. In case any input material, whether of direct or indirect nature, including packing material, is supplied free of cost or at concessional value by the buyer of the excisable good, the cost of such material shall be included in the . For example: Amortisation Cost of .....

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actual capacity utilization whichever is higher and unabsorbed cost, if any, shall be treated as abnormal cost. 5.21 Fines, penalties, damages, demurrage and similar levies paid to statutory authorities or other third parties shall not form part of the of excisable good. 5.22 The forex component of imported material or other element of cost shall be converted at the rate on the date of the transaction. Any subsequent change in the exchange rate till payment or otherwise shall not form part of of .....

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an excisable good. 6. Assignment of Cost 6.1 While assigning various elements of of excisable goods, traceability to an excisable good in an economically feasible manner shall be the guiding principle. The cost which can be traced directly to each excisable good shall be directly assigned. 6.2 Assignment of of excisable goods, which are not directly traceable to the excisable good shall be based on either of the following two principles; 6.2.1 Cause and Effect - Cause is the process or operation .....

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basis of the normal capacity or actual capacity utilization of the plant, whichever is higher. 6.5 In case a production process results in more than one product being produced simultaneously, treatment of joint products and by-products shall be as under: 6.5.1 In case joint products are produced, joint costs are allocated between the products on a rational and consistent basis. 6.5.2 In case by-products are produced, the net realisable value of by-products is credited to the of the main product. .....

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s of Cost shall be presented separately. 8. Disclosures 8.1 Disclosure shall be made only where material, significant and quantifiable. 8.2 If there is any change in cost accounting principles and practices during the period under review which may materially affect the of excisable good in terms of comparability with previous period(s), the same shall be disclosed. 9. Effective date This Cost Accounting Standard shall be effective from the period commencing on or after 1st April 2015 for being a .....

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