Importance and advantages of Expense Control Chart
Importance and advantages of Expense Control Chart. It is always advisable for CMA Department to prepare Expense Control Chart as mentioned in Annexure – 1. Expense Control Chart provides the following details :
It lists down all the Cost Elements bifurcated into relevant Cost Centres like :
- Production Cost Centres
- Utilities Cost Centres
- Overhead Cost Centres like FOH, AOH & SOH
- Expenses not included in Cost
- Total of each Cost Elements as per Control Chart
- Total of each Cost Elements as per Profit & Loss Account
- There should not be any difference between Total as per Control Chart and Total as per P & L Account
Importance and Advantages of Expense Control Chart :
1) It ensures that all the expenses incurred as per P & L Account are properly accounted for at the time of Building Up of Cost Records and Resultant Product Cost Sheets.
2) It provides reasonable assurance to management that cost provided by CMA Department are reliable for decision making.
3) It helps in various statutory compliances like :
- Valuation of Inventories for both Financial Accounts and Cost Accounts
- Preparation, audit and filing of Cost Audit Report
4) Data for Anti Dumping can be prepared and submitted with reasonable accuracy
5) Any other Costing Based MIS Report, if any required by management, can be prepared and submitted with reasonable accuracy and reliability
The Estimate and the Project Budget
The estimate is a static document at a specific point in time (Bid time). The estimate reflects what the project was bid for and the quantities and unit prices used.
The project budget continuously evolves until project completion. The project budget reflects the actual scope at the site and the actual quantities from construction issued drawings and a standard productivity rate. The project budget will always include change orders and extra work orders in terms of changed quantities and costs. These terms are important because the productivity and labor cost reports should reflect the project budget. Therefore, the project budget should reflect the actual quantities placed and a standard unit rate for each work activity.
This is considered the project budget. The project budget should be compared to the estimate but this comparison should only be made in the Project Cost Summary Report. This report compares the actual and projected quantities, workhours and costs for the project to the estimated costs. This reports the current status and the latest forecast of profit or loss by cost codes.