TaxTMI 
TaxTMI 
Direct Expenses
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....roduct 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 Direct Expenses with reasonable accuracy. Scope 3. This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Direct Expenses including those requiring attestation. Definitions 4. The following terms are being used in this standard with the meaning specified. 1[4.1 Abnormal cost: An unusual or a typical cost whose occurrence is usually irregular and unexpected and/ or due to some abnormal situation of the production or operation.] 2[4.2 Cost Object: Th....
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.... Finance costs and Borrowing costs are used interchangeably. 7[4.7 Imputed Costs: Hypothetical or notional costs, not involving cash outlay, computed for any purpose.] 8[4.8 Overheads: Overheads comprise of indirect materials, indirect employee costs and indirect expenses which are not directly identifiable or allocable to a cost object.] 4.9 Standard Cost: A predetermined cost of resource inputs for the cost object computed with reference to set of technical specifications and efficient operating conditions. Standard costs are used as scale of reference to compare the actual costs with the standard cost with a view to determine the variances, if any, and analyse the causes of variances and take proper measure to control them. Standard ....
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.... be estimated for the effective period and based on volume achieved during the Cost Accounting period, the charge for amortisation be determined. 5.3 If an item of Direct Expenses does not meet the test of materiality, it can be treated as part of overheads. 5.4 Finance costs incurred in connection with the self generated or procured resources shall not form part of Direct Expenses. 5.5 Direct Expenses shall not include imputed costs. In case of goods produced for captive consumption, treatment of imputed cost shall be in accordance with Cost Accounting Standard - 4 (CAS-4). 5.6 Where direct expenses are accounted at standard cost, variances due to normal reasons shall be treated as part of the Direct Expenses. Variances due to abnormal....
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....ses, as applicable. 3. Where Direct Expenses are accounted at standard cost, the price and usage variances. 4. Direct expenses representing procurement of resources and expenses incurred in connection with resources generated. 9[5. Direct Expenses paid/ payable to related parties.] 6. Direct Expenses incurred in foreign exchange. 7. Any Subsidy/Grant/Incentive and any such payment reduced from Direct Expenses. 8. Credits/recoveries relating to the Direct Expenses. 9. Any abnormal portion of the Direct Expenses. 10. Penalties and damages excluded from the Direct Expenses 8.2 Disclosures shall be made only where material, significant and quantifiable. 8.3 Disclosures shall be made in the body of the Cost Statement or as a foot note ....