ABSTRACT
Cost is defined as the amount or equivalent paid, or charged, or given for anything; loss of any kind, expenditure, outlay, as of money, time, labour. A modification of this method which is not quite as simple, but really affords no difficulty, is after ascertaining the amount to be charged off during the life; of the machine to determine a percentage which, when applied to the net book value of the machine. Variable charges or controllable expenses are the final items of factory overhead. The principles of double-entry are carried out in connection with a cost system by means of what is known as "Controlling Accounts". Depreciation is one of the most important of all the overhead expenses, because it is generally the largest. Materials Account is charged with all purchases of materials from the accounts payable or voucher register. Labour Account is charged with the total labour, both direct and indirect.
