Cost accounting is the process of tracking and recording the cost of goods and services in order to make informed business decisions. This includes the cost of producing or purchasing items, as well as the cost of delivering those items to customers. Cost accounting can help businesses identify inefficiencies in their production processes and make changes that lead to reduced costs. It can also help managers make informed decisions about pricing, product lines, and other strategic decisions.
There are a number of different methods and tools that businesses can use for cost accounting. One popular approach is activity-based costing, which assigns costs to specific activities rather than products or departments. This can be helpful in understanding how different parts of the business contribute to costs. Other cost accounting methods include process costing and job costing.
Businesses use cost accounting data to make a variety of decisions, from setting prices to deciding which products to produce. By understanding the cost of goods and services, businesses can ensure that they are making informed decisions that will lead to profitability.
What are the objectives of cost accounting?
The objectives of cost accounting are to:
- Track and record the cost of goods and services
- Identify inefficiencies in production processes
- Make informed decisions about pricing, product lines, and other strategic decisions.
What are the benefits of cost accounting?
The benefits of cost accounting include:
- Improved decision making
- Reduced costs
- Increased profitability.