Question

costing system perform functions?

Answer 1

Functions of Cost Accounting

• ascertain the cost per unit of every product that the company manufactures.

• to identify any wastages whether in material, expense, time, tools and spares etc. ...

• also, provide data that helps in the process of price fixing.

• calculate with accuracy the profitability of each of the company's products.

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Answer 2

Answer:

Functions of Cost Accounting

To understand the entire cost structure of a firm, cost accounting is crucial. It ascertains the costs of various products, processes etc.

So we can compare them to the sales and arrive at the true profitability of the firm. This is one of the main objectives or functions of cost accounting. To achieve this the actual functions of cost accounting change daily. Let us take a look,

• ascertain the cost per unit of every product that the company manufactures
• to identify any wastages whether in material, expense, time, tools and spares etc. Also, suggest ways to minimize this wastage
• also, provide data that helps in the process of price fixing
• calculate with accuracy the profitability of each of the company’s products. And figure out ways to maximize these profits
• cost accounting is also responsible for the control of raw material and raw material ordering. So it must ensure that we are not overordering which leads to capital being locked-up unnecessarily. And underordering will lead to inefficiency in the manufacturing process,
• also, perform the functions of cost control for materials, labor, and other miscellaneous expenses
• present data to the management that allows them to interpret the data and make business decisions
• help management with incentive plans that are based on efficiency
• also, help the management with the preparation of budgets and setting up budgetary controls.