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TMI BlogDetermination of average (Equalized) cost of TransportationX X X X Extracts X X X X X X X X Extracts X X X X ..... inciples for tracing/identifying an element of cost, its allocation/apportionment to a product or service are well established. Transportation cost is an important element of cost for procurement of materials for production and for distribution of product for sale. Therefore, Cost Accounting Records should present transportation cost separately from the other cost of inward materials or cost of sales of finished goods. The Finance Act, 2003 also specifies the certification requirement of transportation cost for claiming deduction while arriving at the assessable value of excisable goods cleared for home consumption/export. There is a need to standardize the record keeping of expenses relating to transportation and computation of transportat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g specified : 4.1 Cost of Transportation comprises of the cost of freight, cartage, transit insurance and cost of operating fleet and other incidental charges whether incurred internally or paid to an outside agency for transportation of goods but does not include detention and demurrage charges. Explanation : Cost of transportation is classified as inward transportation cost and outward transportation Cost. 4.2 Inward Transportation cost is the transportation expenses incurred in connection with materials/goods received at factory or place of use or sale/removal. 4.3 Outward Transportation cost is the transportation expenses incurred in connection with the sale or delivery of materials or goods from factory or depot or any other place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing details of various elements of cost, such as salaries and wages of driver, cleaners and others, cost of fuel, lubricant grease, amortized cost of tyres and battery, repairs and maintenance, depreciation of the vehicles, distance covered and trips made, goods hauled and transported to the depot. 5.3 In case of hired transport charges incurred for despatch of goods, complete details shall be recorded as to date of despatch, type of transport used, description of the goods, destination of buyer, name of consignee, challan number, quantity of goods in terms of weight or volume, distance involved, amount paid, etc. 5.4 Records shall be maintained separately for inward and outward transportation cost specifying the details particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of cost: 6.1 Inward transportation costs shall form the part of the cost of procurement of materials which are to be identified for proper allocation/ apportionment to the materials/products. 6.2 Outward transportation cost shall form the part of the cost of sale and shall be allocated/apportioned to the materials and goods on a suitable basis. Explanation : Outward transportation cost of a product from factory to depot or any location of sale shall be included in the cost of sale of the goods available for sale. 6.3 The following basis may be used, in order of priority, for apportionment of outward transportation cost depending upon the nature of products, unit of measurement followed and type of transport used: (i) Weight (ii) V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... types of transactions. For example: Sale on specific rate basis, sale of waste, scrap, return from customer, goods sent for job work, goods received after job work etc. Unit of Measurement (UM) may vary depending upon the nature of the product. For example, Number, MT, Meter, Litre etc. Proper records shall be maintained to show separately the Transportation Cost relating to sending of jobs to job contractors/convertors and receipt back of processed jobs/converted materials. An enterprise shall be required to maintain cost records and other books of account in a manner which would facilitate preparation and verification of cost of transportation and other related charges and its apportioning to various products. Transaction value 8. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PORTIONMENT (Basis to be specified) - usage C1. Inward Transport Cost (B14 *A7/A9) C2. Outward Transport Cost (B14 *A8/A9) C3. Transit insurance for inward movement C4. Transit insurance for outward movement C5. Total transportation cost for inward movement (C1+C3) C6. Total transportation cost for outward movement (C2+C4) Note: 1. Cost of Battery, and Tyres and Tubes shall to be amortised over its useful life. 2. Asset Register shall be maintained for determination of depreciation and amortization cost. 3. Separate Cost Sheet shall be prepared for different types of vehicles. Appendix 2 Name of the Manufacturer: Address of the Manufacturer: Statement of Hired Outward Transportation Cost for the period ending…&hel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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