cost accounting

dileepkumar (Querist)
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24 July 2016 In Cost sheet of a product, how various taxes like a sales tax, vat ,are treated ? if excluded why ?

CA. Sunil Gokhale (Expert)
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24 July 2016 Excise & VAT are not part of cost as they are collected on behalf of Government. Property tax of factory shud be taken in factory odhds. & of office in office ohds

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dileepkumar (Querist)
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26 July 2016 thanks sir

dileepkumar (Querist)
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26 July 2016 sir I saw some books there considerd excise duty and sales tax when preparation of cost sheet. piz help me what your opinion on above mentioned.

CA. Sunil Gokhale (Expert)
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26 July 2016 Arithmetically I can tell you how to adjust the taxes and match the profit figure but the taxes you have mentioned are neither cost nor revenue to the manufacturer who simply acts as an agent to collect the taxes on behalf of the government so easier leave them out

dileepkumar (Querist)
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27 July 2016 thank you sir

dileepkumar (Querist)
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27 July 2016 piz read this article In a Cost Sheet of a product, taxes like Sales tax, excise duty, custome duty are included in Cost of Material. If Cenvat & Vat claim availed the Cost of Material should be taken as Net of Cenvat & Vat. This means above taxes are included in Cost Sheet only if there is no exemptions on Excise, Customs & Sales Tax. Income Tax Liability is a Financial liablity so it will not be included in Product Cost Sheet.

CA. Sunil Gokhale (Expert)
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27 July 2016 Taxes on purchases/inputs for which no credit is available will definitely be included as the burden is on the manufacturer.

dileepkumar (Querist)
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27 July 2016 means I take sales take under the selling and administrative overheads

dileepkumar (Querist)
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28 July 2016 means I take sales take under the selling and administrative overheads

dileepkumar (Querist)
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28 July 2016 means I take sales tax under the selling and administrative overheads

CA. Sunil Gokhale (Expert)
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28 July 2016 Yes, assuming this is the sales tax paid on sale. If it is on materials purchased then it would be part of cost of material if credit into available. But I'm sure only sales tax in give in the Q and no other details.

dileepkumar (Querist)
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28 July 2016 thank you sir

dileepkumar (Querist)
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28 July 2016 preparation of cost sheet how to treat a bad debts and bad debt collection charges

CA. Sunil Gokhale (Expert)
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28 July 2016 What shud be included or excluded from cost can be debated. Recently many people are arguing in favor of including interest. Most books consider bad debts as finance cost, like interest, & so exclude it. However I feel that all businesses need to sell on credit & accept bad debts as a normal unavoidable loss & adjust their credit sale price accordingly so it should be included.
For academics you may exclude.
Therefore, recovery charges also excluuded