Quality Control: As per CAS 21, Quality Control is a procedure or a set of procedures exclusively designed to ensure that the manufactured products or performed service(s) adhere to a defined set of quality criteria or meet requirements of the client or the customer.

(ii) Treatment of Quality Control Cost:

a) Quality Control Costs incurred in-house shall be the aggregate of the costs of resources consumed in the Quality Control activities of the entity. The costs of resources procured from outside shall be determined at invoice or agreed price, including duties and taxes, and other expenditures directly attributable thereto, net of discounts (other than cash discounts), taxes and duties refundable or to be credited by the Tax Authorities.

Such costs shall include the Cost of Conformance to Quality:

(a) Prevention Cost and

(b) Appraisal Cost.

b) Identification of Quality Control Costs shall be based on traceability in an economically feasible manner.

c) Quality Control Costs, other than those referred to above, shall be determined on the basis of the amount incurred in connection therewith.


d) Finance costs incurred in connection with the self-generated or procured resources shall not form part of the Quality Control Costs.

e) Quality Control Costs do not include imputed costs.

f) Any Subsidy/Grant/Incentive or any such payment received/receivable with respect to any Quality Control Cost shall be deducted for the ascertainment of the cost of the cost object to which such amounts are related.

g) Any abnormal portion of the Quality Control Costs where it is material and quantifiable shall not form part of the Costs of Quality Control.

h) Penalties and damages paid to statutory authorities or other third parties shall not form part of the Quality Control Cost.


i) Any change in the cost accounting principles applied for the measurement of the Quality Control Costs shall be made only if it is required by law or for compliance with the requirements of a Cost Accounting Standard or the change would result in a more appropriate preparation or presentation of cost statements of an organization.

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