According to the Chartered Institute of Management Accountants, London, Cost Cen tre is defined as a location, person or items of equipment

(or group of these) for which costs may be ascertained and used for purposes of cost control. In other words, cost centre is a part of an organi zation which includes location, processes, equipment, (or) machine centres, various departments, perso ns etc. in relation to which costs can be charged or ascertained. Cost Centres can be classified into the following types : (1) Personal Cost Centre: It consists of a person or group of persons, e.g., sal esmen, Marketing Manager, etc. (2) Impersonal Cost Centre: It is a Cost Centre which consists of a location or items of equipment. (3) Operation Cost Centre: It consists of machines and/or persons carrying out s imilar operations. (4) Process Cost Centre: It is a Cost Centre which consists of a specific proces s or a continuous sequence of operations. (3) Recording Transactions are classified, recorded and In cost accounting, tran sactions are analysed subjectively. classified, recorded and analysed objectively according to the purpose for which costs are incurred. (4) Analysis of Profit Financial accounting reveals the profit of a Cost Account ing shows the profit made on business as a whole. each product, job or process. (5) Accounting period Financial accounts are prepared for a Cost reports are pre pared frequently and definite period. submitted to the management may be daily, weekly, etc. (6) Stock valuation In financial accounts, stocks are valued at Cost accounting stocks are valued at cost. cost price or market price whichever is less. (7) Dealings Financial accounts deal with actual facts In cost account lays emph asis on both actual and figures. facts and estimates or predetermined cost. (8) Relative Efficiency Financial accounts do not reveal the rp.lative Cost acco unt provides information on the efficiency of each department or section. relative efficiencies of various plant and Machinery. Purchasing Procedure (1) Bill of Materials. (2) Purchase Requisition. (3) Selection of Suppliers. (4) Purchase Orders. (5) Goods Received Note. (6) Inspection of Materials. The ABC ems the ABC Analysis Analysis is one of the important techniques which is based on grading the it according to importance of materials. This method is popularly known as Always Better Con

trol. This is also termed as Proportional Value Analysis - In inventory control, this technique helps to a nalyze the distribution of any characteristic by money value of importance in order to determine its import ance. Accordingly, materials are grouped into three categories on the basis of the money value of i mportance of materials. (1) High Value Materials - A (2) Medium Value Materials - B (3) Low Value Materials - C The items, which are of high value and less than 10 per cent of the total consum ption or inventory can be called as 'A' grouped materials. It is required to exercise selective con trol and focus more attention because of high value items. Similarly, 70 per cent of materials in total consum ption or inventory which lies 10 per cent of the inventory value can be grouped under 'C' categories. The materials which have moderate value that lies between the high value materials and low value material s are grouped under 'B' category. The following table shows more explanation about ABC Analysis : Category Percentage to total inventory Percentage to total inventory cost A b c Less than 10 10 to 20 70 to 80 70 to 80 15 to 25 less than 10