FUNDAMENTAL CONCEPT OF COST:
Business firms are very much concerened about cost
reduction and cost control in order to earn profits in a highly competitive
market.
MEANING OF COST:Cost means the’”price paid for something.or sacrifice made to
acquire something.For example if u have purchased a book for 100,the cost of
the book to u is 100/-.In management terminology cost is the expenditure
incurred to generate revenue.The term cost may be defined as the money spent or
liability incurred for acquiring goods or services .According to Royall, A cost
is the sum of three three groups or components-the purchase or transfer price
of material,the cost of the hire of labourand the value of other disbursements
or expenditure incurred in achieving the the desired product or result.
ELEMENTS OF COST:
There are three basic elements of cost-material,labour and
expenses.Each of these can be further divided into direct and indirect.
(A) DIRECT
MATERIAL: All materials
which become an integral part of the finished product and which can be easily
measured and directly charged to product are called direct material.
1)any raw material,semi finished items,or componenet used for
manufacturing a particular iteme eg cloth for dress making..
2)any material specifically purchased for manufacturing a
particular product eg,colour for dyeing cloth.
3)primary packing material eg,bottle used in coke or pepsi.
(B) INDIRECT MATERIALS:are those materials which can not be directly assigned to the
specific product but which can be apportioned.Consumable stores,oil and
waste,nails and grease are examples of indirect materials.
INFLATION:-is generally defined as the process of persistent and
appreciablerise in the general price level.In other words when too much money
chasing too few goods its termed inflation.There are two types of
inflation:
1)DEMAND PULL INFLATION:It is an inflation created by the pressure of
excess dmand in the market.If aggregate dmand increases rapidly and exceeds the
the production price will beging to rise.The essesnce of demand pull inflation
is too much spending out against a limited supply of goods.
2)COST PUSH INFLATION:I t refers to inflationary rise in prices
which arise due to increase in cost.Cost push inflation may be caused by
increase in cost of production.
GDP:is defined as the
value of all final goods and services produced in a year in the domestic
territory of the country.An estimated value of the total growth of a countrys
production and services calculated over the course of one year.
GDP=CONSUMPTION+INVESTMENT+GOVT
SPENDING+(EXPORT-IMPORT)
It is calculated to see the strength of a countrys total
economy.
TERMS RELATED TO STOCK MARKET:It is important to judge the companys
strength before purchase of any share of a company.Following factors may be
considere:
1)DIVIDEND:may be defined as the payment made to
shareholders usually once or twice in a year from companys profit after tax.
2)BOOK VALUE:SHARE HOLDERS FUND(EQUITY SHARE
CAPITAL+RESERVE)
NO OF
EQUITY SHARES
Suppose xyz co has a equity share capital of rs 100000 dived
into 10000 equity shares and accumulation of reserve is 600000 then the
book valu = EQUITY SHARECAPITAL+RESERVE
NO
OF EQUITY SHARES
= 100000+600000
10000
HOW TO MAKE MONEY IN STOCK MARKET-A Comprehensive course designe
SOUMITRA CHOWDHURY
TREBLE COLUMN CASH BOOK