‘Interest is a factor which cannot be disregarded by management”. Explain.

1. ‘Interest is a factor which cannot be disregarded by management’. Explain.

2. Set out the main arguments in favor of inclusion of interest on capital in cost accounts.

3. Discuss the treatment of the following items in cost accounts. Capacity cost Set-up time Packing expenses Blue print and design.

4. The level of production activity fluctuates widely in your company from month to month. Because of this the incidence of depreciation on unit cost varies considerably. The management decides that you find out a suitable method to correct this.