IMPORTANT TOPICS OF JAIIB 2023 AFM EXAM
Learning sessions are back with content-enriched notes on an important topic of AFM. In this article, we are providing notes on the important newly introduced topics of JAIIB.
You may rarely find study material in the market that has included newly introduced topics in the revised JAIIB 2023 syllabus. The learning sessions team has started online video lectures and even started uploading free notes to help you with AFM important topic. To save you time, we are summarizing our video lectures into notes that you can easily read in our articles.
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VERY IMPORTANT TOPIC JAIIB AFM COST
In JAIIb Afm cost is a very important topic so prepare it properly. To produce, market ( sell goods and services or purchase assets) a sum of money is required which we call cost.
Expenses charges may get delayed for quite some time. Asset conversion from the balance sheet to expenses in the income statement is based on the concept of cost.
ELEMENTS OF COST
The costs that go into the creation of a product are known as the costs of manufacturing. These cost components can be roughly categorized into three groups. With the use of Labor and other services, we turn raw materials into a finished product in a manufacturing organization. Materials, Labor, and expenses make up these services.
Let’s understand with the help of an example and a little bit of explanation:
Suppose we have to manufacture a chair.
What do we require to manufacture it?
Raw material, Labor, and some other expenses
The raw material will be of two types:
Direct material: It stands for the supplies or raw materials required to make or generate a product. Direct material costs vary depending on the volume of output. In the case of manufacturing a chair wood is a direct material.
Indirect material: It refers to a non-specific substance that we need to make a product. It is not a component of the completed well. An illustration would be the construction of a table using nails. The price of indirect material is constant regardless of how much of a product is produced directly. In the case of manufacturing a chair machine, oil, and adhesives can be examples of indirect materials
|ELEMENTS OF COST||RAW MATERIAL||EXAMPLE||LABOR||EXAMPLE||OTHER EXPENSES||EXAMPLE|
|Direct material||Wood||Direct Labor||Workers||Direct expenses||Polish|
|Indirect material||Adhesives, machines||Indirect Labor||Manager||Indirect expenses||Electricity required to power the machines|
Labor would be required to manufacture the chair which will further divide into:
Direct Labor: Indirect laborers who are involved in the production of goods are compensated for this amount. It is not directly correlated with the volume of output. Workers directly influence the rate of production.
Indirect Labor: Indirect laborers who are involved in the production of goods are compensated for this amount. It is not directly correlated with the volume of output. It involves who manages the work and indirectly influences the rate of production.
Some other expenses will also take place in the process of manufacturing a chair which also further divides into direct and indirect expenses
Direct expenses: These allude to the costs that businesses specifically suffer when producing a good. Without spending these costs, production is not possible. The degree of output immediately affects it.
Direct expenses: These stand for the costs that the company incurs to produce a good. These costs are difficult to correctly identify. Power costs, for instance, are incurred during pen manufacture.
Watch a comprehensive YouTube lecture that covers JAIIB 2023’s newly introduced topic. It’s rarely covered by any other institutes.
|Topics covered||Link to the video|
|Why is costing required in a business? Cost, costing, cost accounting, cost accountancy, practice questions.||https://youtu.be/k9ZXZv1JDyQ|
|Cost, elements of cost, direct labor, material and expense, indirect labor, material and expense, and inward carriage||https://youtu.be/goOu-OhZBK0|
Types of cost, fixed cost, variable costs, semi-variable cost, controllable costs and uncontrollable cost, opportunity cost, operating cost,
|Classification of cost, Functional classification of cost, classification on the basis of time, cost classification for decision making, on the basis of the accounting period, association with the product, costing by the degree of traceability to the product, by changes in activity or volume,||https://youtu.be/TzwVAXVFlZI|
|Costing and its types, job costing, contract costing, batch costing, process costing, operating costing, departmental costing, Multiple or composite costing||https://youtu.be/z2dWwNmJETM|
|Techniques of costing, Historical costing, standard costing, absorption costing, marginal costing, direct costing, uniform costing, activity-based costing,||https://youtu.be/Clpp0SfAtAE|
|Cost accounting detailed, Cost accountancy detailed, Importance of cost accounting, the difference between final accounting and cost accounting, the scope of cost accountancy||https://youtu.be/5kzMl1EzmIc|
|Nature and scope of financial management, estimation of financial requirement, deciding capital structure, selecting a source of finance, selecting a pattern of investment, proper cash management, implementing financial controls, Management of earnings/Profits, the relationship of finance with other business function||https://youtu.be/Tpjmpd6F6pA|
JAIIB AFM IMPORTANT TOPIC PRACTICE QUESTIONS:
|………….. is a substance or mixture of substances that form an object.
|Which of these is an example of direct material
|Workers who manufacture goods are:
|The manager of a factory is known as
|Which of the following could be considered a direct expense
To verify your answers, refer to our video lecture that comprehensively explains the cost, elements of cost, direct labor, material and expense, indirect labor, material and expense, and inward carriage. Here is the link to the video https://youtu.be/goOu-OhZBK0
To read the article that covers why is costing required in a business. Cost, costing, cost accounting, cost accountancy, practice questions. Refer to
For a detailed video lecture: https://youtu.be/k9ZXZv1JDyQ
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