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Cost Accounting · Cost Accounting Standards (CAS 1 to CAS 24)

CAS 19 to CAS 24: Joint Costs, Loss and Specialised Costs

Updated 10 October 2026 · Fact-checked

CAS 19 to CAS 24 cover joint costs, royalty and technical know-how fee, loss, manufacturing cost, overburden removal cost, and revenue grants and incentives. For numericals, split joint cost at the split-off point, keep normal loss inside product cost, charge abnormal loss separately, and deduct related grants from cost.

Understand CAS 19 to CAS 24: Specialised Costs and Waste Treatment

Cost Accounting Standards give one agreed way to measure and assign cost. CAS 19 to CAS 24 deal with costs that are hard to assign: shared costs, payments for rights, losses, and subsidies. The six standards are CAS 19 Joint Costs, CAS 20 Royalty and Technical Know-how Fee, CAS 21 Loss, CAS 22 Manufacturing Cost, CAS 23 Overburden Removal Cost, and CAS 24 Treatment of Revenue Grants and Incentives.

CAS 19 (Joint Costs). One process can create several products that cannot be separated before a point called the split-off point. The cost incurred up to that point is the joint cost. It must be shared among the joint products on a reasonable basis, such as sales value at split-off, net realisable value, or physical quantity. Costs after split-off belong to the individual product. A by-product has low value compared with the main products. In exam numericals its net realisable value is usually deducted from the joint cost before the split.

CAS 20 (Royalty and Technical Know-how Fee). These are payments for using rights, patents, designs or know-how. The key test is what the payment is linked to. If it is tied to production, it is a cost of making the product. If it is tied to sales, it is a selling cost and stays out of production cost.

CAS 21 (Loss). A loss is a reduction in quantity or value that does not give a benefit. Normal loss is expected in the process, so its cost is absorbed by good units, after crediting any scrap value. Abnormal loss is beyond the normal level. It is not loaded into product cost. It is valued like a good unit, less any scrap value, and written off to the costing profit and loss account.

CAS 22 (Manufacturing Cost) says what goes into the cost of a manufactured product: direct material, direct employee cost, direct expenses and manufacturing overheads, net of recoveries such as scrap sales. Administration, selling and abnormal costs stay out. CAS 23 covers the cost of removing overburden in mining. CAS 24 says a revenue grant or incentive linked to a specific cost is deducted from that cost, once there is reasonable assurance it will be received.

Note that research and development costs fall under CAS 18, not in this range. Quality control is also not a standard in CAS 19 to 24, so do not look for it here.

Key rules to remember

Joint cost apportionment (sales value at split-off)
Share of joint cost for a product = (Sales value of the product at split-off ÷ Total sales value of all joint products) × Net joint cost
Net joint cost = total joint cost minus net realisable value of by-products. Use this basis when the question gives sales values at split-off.
Net realisable value (NRV) basis
NRV at split-off = Final sales value − Further processing cost − Selling cost after split-off
Use when products need further processing after split-off. Apportion joint cost in the ratio of NRV.
Cost per good unit with normal loss
Cost per unit = (Total cost − Scrap value of normal loss) ÷ (Input units − Normal loss units)
Normal loss units carry no cost of their own. Their net cost is spread over expected good output.
Abnormal loss charge
Abnormal loss = Abnormal loss units × Cost per unit − Scrap value of those units
Written off to the costing profit and loss account. It is not included in product cost.
Royalty treatment rule
Royalty linked to production = production cost; royalty linked to sales = selling overhead
Decide by what triggers the payment, not by the name given in the question.
Grant treatment rule
Cost of the related cost object = Gross cost − Revenue grant or incentive linked to that cost
Only when there is reasonable assurance the grant will be received.

How to solve CAS 19 to CAS 24: Specialised Costs and Waste Treatment questions

Use this order for any question on CAS 19 to CAS 24. It works for joint cost splits, loss treatment and cost classification.

  1. 1Identify the standard from the keywords: joint or by-product (CAS 19), royalty or know-how (CAS 20), loss or scrap (CAS 21), manufacturing cost (CAS 22), overburden (CAS 23), grant or incentive (CAS 24).
  2. 2List the quantities and amounts given. Mark input, output, normal loss, abnormal loss and scrap values clearly.
  3. 3For joint costs, find the split-off point. Deduct the by-product NRV from joint cost. Choose the apportionment basis the question states.
  4. 4For loss, compute normal loss units and credit scrap value first. Divide the net cost by expected good output to get cost per unit.
  5. 5Value abnormal loss at that cost per unit and deduct its scrap value. Show it as a separate charge to the costing profit and loss account.
  6. 6Classify other items: production-linked royalty goes into manufacturing cost, sales-linked royalty into selling overhead, and grants reduce the related cost.
  7. 7Do a cross-check. Good output cost + abnormal loss at gross cost (before deducting its scrap value) should equal total cost less normal scrap value.
  8. 8Write a one-line conclusion naming the standard and the treatment, since ICMAI examiners reward the reason along with the figure.

Quickest way: Three-question shortcut for CAS 19 to 24 problems

When to use it: Use when time is short, especially in MCQs and in short parts of descriptive questions.

  1. Ask: is this cost shared (CAS 19), a payment for rights (CAS 20), a loss (CAS 21), a product cost (CAS 22) or a subsidy (CAS 24)?
  2. For loss: normal loss goes into good units; abnormal loss goes to the costing profit and loss account.
  3. For royalty: production link means cost of production; sales link means selling overhead.
  4. For joint costs: subtract by-product NRV first, then split in the ratio of the basis given.
  5. For grants: deduct from the related cost; do not show as ordinary sales income.

Common mistakes in CAS 19 to CAS 24: Specialised Costs and Waste Treatment

  • Adding abnormal loss into product cost.

    Students treat all loss as a cost of production.

    Fix: Only normal loss is absorbed by good units. Abnormal loss is valued separately and written off to the costing profit and loss account.

  • Dividing total cost by input units instead of expected good output.

    The normal loss units are forgotten when calculating cost per unit.

    Fix: Divide net cost by input minus normal loss units. Net cost means total cost minus scrap value of normal loss.

  • Apportioning joint cost before deducting the by-product NRV.

    Students treat the by-product like another joint product.

    Fix: Deduct the by-product's net realisable value from joint cost first. Then split the balance among the joint products.

  • Including post-split-off costs in the joint cost pool.

    Students see all processing costs as one block.

    Fix: Only costs up to the split-off point are joint. Costs after it belong to the individual product.

  • Putting all royalty into manufacturing cost.

    Royalty sounds like a production expense.

    Fix: Read what triggers the payment. Production-linked royalty is a manufacturing cost. Sales-linked royalty is a selling overhead.

  • Mixing up standard numbers, for example placing research cost or quality control in CAS 19 to 24.

    The standards are memorised as a flat list.

    Fix: Learn the six titles in order: Joint Costs, Royalty and Technical Know-how Fee, Loss, Manufacturing Cost, Overburden Removal Cost, Revenue Grants and Incentives. Research and development is CAS 18.

Worked examples

Example 1

A process takes 10,000 units of input. Total cost of the process is ₹5,04,000. Normal loss is 5% of input and its scrap sells at ₹20 per unit. Actual output is 9,200 units. Find the cost per unit, the value of good output, and the amount charged for abnormal loss.

Show the solution
  1. Normal loss = 5% × 10,000 = 500 units.
  2. Scrap value of normal loss = 500 × ₹20 = ₹10,000.
  3. Net cost = ₹5,04,000 − ₹10,000 = ₹4,94,000.
  4. Expected good output = 10,000 − 500 = 9,500 units.
  5. Cost per unit = ₹4,94,000 ÷ 9,500 = ₹52.
  6. Actual loss = 10,000 − 9,200 = 800 units. Abnormal loss = 800 − 500 = 300 units.
  7. Abnormal loss at gross cost = 300 × ₹52 = ₹15,600. Scrap recovered on these units = 300 × ₹20 = ₹6,000. Net charge to the costing profit and loss account = ₹15,600 − ₹6,000 = ₹9,600.
  8. Value of good output = 9,200 × ₹52 = ₹4,78,400.
  9. Check: good output ₹4,78,400 + abnormal loss at gross cost ₹15,600 = ₹4,94,000. This matches the net cost. The scrap of ₹6,000 is recovered separately, which is why the net charge is ₹9,600.

Answer: Cost per unit is ₹52. Good output is valued at ₹4,78,400. Abnormal loss costs ₹15,600 gross; after scrap of ₹6,000 is recovered, the net ₹9,600 is written off to the costing profit and loss account as per CAS 21.

Example 2

A process incurs a joint cost of ₹3,60,000 up to the split-off point. It gives joint products A (4,000 kg) and B (2,000 kg) and a by-product C with net realisable value of ₹20,000. Sales value at split-off is ₹60 per kg for A and ₹80 per kg for B. Apportion the joint cost and find the cost per kg of A and B.

Show the solution
  1. Net joint cost = ₹3,60,000 − ₹20,000 = ₹3,40,000.
  2. Sales value of A = 4,000 × ₹60 = ₹2,40,000.
  3. Sales value of B = 2,000 × ₹80 = ₹1,60,000.
  4. Total sales value = ₹4,00,000. Ratio A : B = 60% : 40%.
  5. Joint cost for A = 60% × ₹3,40,000 = ₹2,04,000.
  6. Joint cost for B = 40% × ₹3,40,000 = ₹1,36,000.
  7. Cost per kg of A = ₹2,04,000 ÷ 4,000 = ₹51.
  8. Cost per kg of B = ₹1,36,000 ÷ 2,000 = ₹68.

Answer: A gets ₹2,04,000 (₹51 per kg) and B gets ₹1,36,000 (₹68 per kg), after crediting the by-product NRV of ₹20,000 against the joint cost, as per CAS 19.

Exam tips

  • In MCQs, the usual traps are normal versus abnormal loss and production versus sales royalty. Read the trigger word before choosing the option.
  • Always show the normal loss, scrap credit and cost per unit as separate lines. Step marks come from these lines even if the final figure is off.
  • Write the basis of joint cost apportionment in your answer. If the question gives no basis, state the one you assume.
  • Learn the six titles and numbers of CAS 19 to 24 exactly. Matching questions can ask which standard covers a treatment.
  • Add one line of interpretation, for example that abnormal loss is a control issue for management. ICMAI answers value this.

Practice questions from Cost Accounting Standards (CAS 1 to CAS 24)

CAS 19 to CAS 24: Specialised Costs and Waste Treatment in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CAS 19 to CAS 24: Specialised Costs and Waste Treatment: frequently asked questions

What are CAS 19 to CAS 24?

They are CAS 19 Joint Costs, CAS 20 Royalty and Technical Know-how Fee, CAS 21 Loss, CAS 22 Manufacturing Cost, CAS 23 Overburden Removal Cost and CAS 24 Treatment of Revenue Grants and Incentives. Together they deal with costs that are shared, paid for rights, lost, or offset by grants.

How does CAS 21 treat scrap, spoilage and abnormal loss?

Normal loss is expected, so its net cost, after crediting scrap value, is absorbed by good units. Abnormal loss is not part of product cost. It is valued at cost per unit less scrap value and charged to the costing profit and loss account.

How do I treat a revenue grant under CAS 24?

When there is reasonable assurance of receiving it, a grant linked to a specific cost is deducted from that cost. This lowers the cost of the related cost object. Do not treat it as ordinary sales revenue.

What goes into manufacturing cost under CAS 22?

It includes direct material, direct employee cost, direct expenses and manufacturing overheads, less recoveries such as scrap sales. Administration, selling and abnormal costs are excluded.