Cost accounting is about calculating the total cost involved in the process of production. In a nutshell: “What it costs to create one widget!”
Estimating the accurate cost of products is critical for profitable operations. A business must know which products are profitable and which ones are not, and this can be ascertained only when it has estimated the correct cost of each product.
Key Objectives of Cost Accounting
- Cost finding
- Cost planning and controlling
- Cost analysis for managerial decision
Six Advantages of Cost Accounting
- Helps in cost control
- Helps in decision making
- Guides in price fixation
- Helps in cost reduction
- Finds out profitable and unprofitable operations
- Finds out idle capacity
Cost accounting systems cannot be installed without proper financial accounting systems.
Talk to your Accountant if you feel your business could benefit from having a Cost Accounting System.