Cost Accounting and Rate Analysis

Cost Accounting and Financial Reporting

• The level of accuracy required for cost accounting and financial reporting influences the chosen allocation method.
• Factors influencing cost allocation include accuracy and precision requirements, available data, and management preferences.

Rate Analysis Concept

• Determine the unit of measurement for each material (e.g., cement in bags, steel in kilograms, bricks in numbers, aggregates in cubic meters, and timber in cubic feet).
• Estimate quantities required for each material based on project specifications and drawings.
• Calculate the unit rate for each material by dividing the total cost by the total quantity.
• Multiply the unit rate by the estimated quantity to find the total cost for each material.

Illustrative Calculations

• Cement: Unit = Bag (50 kg), Estimated Quantity = 500 bags, Unit Rate = Rs.100 per bag, Total Cost = Rs.50,000
• Steel: Unit = Kilogram, Estimated Quantity = 10,000 kg, Unit Rate = Rs.20 per kg, Total Cost = Rs.200,000
• Bricks: Unit = Number, Estimated Quantity = 50,000 bricks, Unit Rate = Rs.3 per brick, Total Cost = Rs.150,000
• Aggregates: Unit = Cubic Meter, Estimated Quantity = 200 cubic meters, Unit Rate = Rs.400 per cubic meter, Total Cost = Rs.80,000
• Timber: Unit = Cubic Feet, Estimated Quantity = 5,000 cubic feet, Unit Rate = Rs.24 per cubic foot, Total Cost = Rs.120,000

Bar Bending Schedule (BBS)

• A BBS is a detailed reinforcement list that provides information about the type, size, quantity, and placement of reinforcement steel bars in a reinforced concrete structure.
• Developing a BBS involves:
  • Understanding structural drawings and design specifications
  • Identifying structural elements and marking reinforcement requirements
  • Calculating reinforcement quantities and checking against standard codes and specifications
  • Grouping and summarizing reinforcement data
  • Utilizing software tools and creating bending shapes and dimensions