DIRECT EXPENSES

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.... of Direct Expenses, for determination of the cost of product or service, and the presentation and disclosure in cost statements. 2. Objective The objective of this standard is to bring uniformity and consistency in the principles and methods of determining the Direct Expenses with reasonable accuracy. 3. Scope This standard should be applied to cost statements, which require classification, measurement, assignment, presentation and disclosure of Direct Expenses including those requiring attestation. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/ or due to some ab....

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....rences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest costs. The terms Interest and financing charges, finance costs, and borrowing costs are used interchangeably. 4.8 Overheads: Overheads comprise costs of indirect materials, indirect employees and indirect expenses. 4.9 Standard Cost: A predetermined cost of a product or service based on 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 costs are also used f....

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....ction / service volumes shall 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 trea....

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.... disclose the following: 1. The basis of distribution of Direct Expenses to the cost objects/ cost units. 2. Quantity and rates of items of Direct Expenses, 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. 5. Direct Expenses paid/ payable to related parties^[6]. 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.....