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TMI BlogManufacturing costX X X X Extracts X X X X X X X X Extracts X X X X ..... ment, presentation and disclosure of Manufacturing Cost of excisable goods. 4. Definitions The following terms are being used in this standard with the meaning specified. 4.1 Abnormal and non-recurring cost: An unusual or atypical cost whose occurrence is usually irregular and unexpected and/or due to some abnormal situation of the production or operation. 4.2 Administrative Overheads: Cost of all activities relating to general management and administration of an organisation. Administrative overheads need to be analysed in relation to production/manufacturing activities and other activities. Administrative overheads in relation to production/manufacturing activities shall be included in the manufacturing cost. Administrative overheads in relation to marketing, projects management, corporate office or any other expense not related to the manufacturing activity shall be excluded from manufacturing cost. 4.3 Captive Consumption: Captive Consumption means the consumption of goods manufactured by one division or unit and consumed by another division or unit of the same organization or related undertaking for manufacturing another product(s), as defined in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to an excisable good in an economically feasible way. 4.7.2 Indirect Employee Cost: The cost of employees which cannot be directly attributed to a particular excisable good. 4.8 Interest and Finance Costs: Costs incurred by an enterprise in connection with the borrowing of funds. 4.9 Manufacturing Cost: Manufacturing cost of an excisable good is the aggregate of costs of all resources used in the process of its manufacturing. Manufacturing cost includes cost of Materials (including process materials), Employee Cost, Cost of Utilities, Packing Cost, Direct Expenses, Repairs Maintenance Cost, Pollution Control Cost, Quality Control Cost, Research Development Cost, Cost of Inputs received free of cost or received at concessional value from the buyer of the excisable good, Depreciation and Amortisation (including amortisation cost of free tools, patterns ,dies, drawings, blue prints, technical maps, charts, engineering, development, art work, design work, plans, sketches, packaging material and the like necessary for production of excisable goods), Cost of Rework, reconditioning, retro-fitment, Manufacturing Overheads, other costs allocable to such activity, adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also deducted. 4.12 Normal Capacity is the production achieved or achievable on an average over a period or season under normal circumstances taking into account the loss of capacity resulting from planned maintenance. Capacity may be determined in terms of units of production or equivalent machine or man hours. 4.13 Packing Material Cost: The cost of material of any nature used for the purpose of packing of excisable good. 4.14 Quality Control Cost: The quality control cost is the expenses incurred relating to quality control activities for adhering to quality standard. These expenses include salaries wages relating to employees engaged in quality control activity and other related expenses. 4.15 Repairs Maintenance Cost: Cost of all activities which have the objective of maintaining or restoring an asset in or to a state in which it can perform its required function at intended capacity and efficiency. 4.16 Research and Development Cost: The research and development cost incurred for development and improvement of the process or the excisable good. 4.17 Royalty: Royalty is compensation/periodic payments for the use of asset (tangible and/or intangible) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The cost of utilities consumed for manufacturing of excisable good shall be measured for each type of utility. 5.7 Packing material cost used for each type of excisable good shall be measured separately. If excisable goods are transferred/dispatched duly packed, the cost of such packing shall include cost of all types of packing in which the excisable goods are removed from the place of removal. 5.8 The Direct Expenses for manufacturing of excisable goods shall be measured for each excisable good separately. 5.9 Repairs and maintenance cost for manufacturing of excisable goods shall be measured for each excisable good separately. 5.10 Depreciation and Amortisation cost for manufacturing of excisable goods shall be measured for each excisable good separately. 5.11 Research Development cost for manufacturing of excisable goods shall be measured for each excisable good separately. 5.12 Cost incurred for manufacturing of excisable goods after split-off point shall be measured for each Joint/By-Product. In case the manufacturing process generates scrap or waste, realized or realizable value net of cost of disposal, of such scrap and waste shall be deducted from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the manufacturing cost. For example: Amortisation Cost of Moulds, Tools, Dies Patterns and Cost of Packing Material etc. received free of cost or at concessional value from the buyer of excisable good shall be included in manufacturing cost. 5.19 Any Subsidy/Grant/Incentive or any such payment received/receivable, from other entity, other than the buyer with respect to any manufacturing cost of excisable good shall be deducted for ascertainment of the manufacturing cost of excisable good to which such amounts are related. 5.20 The manufacturing cost of excisable good shall be determined based on the normal capacity or actual capacity utilization whichever is higher and unabsorbed cost, if any, shall be treated as abnormal cost. 5.21 Fines, penalties, damages, demurrage and similar levies paid to statutory authorities or other third parties shall not form part of the manufacturing cost of excisable good. 5.22 The forex component of imported material or other element of cost shall be converted at the rate on the date of the transaction. Any subsequent change in the exchange rate till payment or otherwise shall not form part of manufacturing cost of excisable g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be deducted in determination of manufacturing cost. 7. Presentation 7.1 Cost statement as per Appendix 1 to this standard or as near thereto shall present following information: 7.1.1 Actual capacity utilization in absolute terms and as a percentage of normal capacity. 7.1.2 Cost information relating to various elements of Cost shall be presented separately. 8. Disclosures 8.1 Disclosure shall be made only where material, significant and quantifiable. 8.2 If there is any change in cost accounting principles and practices during the period under review which may materially affect the manufacturing cost of excisable good in terms of comparability with previous period(s), the same shall be disclosed. 9. Effective date This Cost Accounting Standard shall be effective from the period commencing on or after 1st April 2015 for being applied for the preparation and certification of Cost Accounting Statements for excisable goods. APPENDIX 1 Cost Statement showing Manufacturing Cost of (Name of excisable good) for the period: Name of the Manufacturer Address of the Manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 Depreciation/Amortization 12 Other Manufacturing Overheads 13 Total(1 to 12) 14 Add/Less Work-in-Progress Adjustments 15 Less Credit for Recoveries , if any 16 Packing Cost 17 Cost of Inputs Received Free or at concessional value from the buyer of the excisable good 18 Manufacturing Cost (13 to 17) Date: Seal Signature of the Company's Authorised Representative I/We have verified above data on test check basis with reference to the books of account, cost accounting records and other records. Based on the information and ..... 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