Question

. Define cost accounting? How do cost accounting records help in planning and control of operations of a business enterprise? Discuss in detail.

Answer 1

Answer:

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Explanation:

Cost accounting records cost and income information for each department, process, job, sales territory in order to ascertain the cost and evaluate the operating efficiency of each division of the business enterprise.

Cost accounting provides information to facilitate both management accounting and financial accounting. Its focus is measuring and reporting financial and nonfinancial information that is related to the cost of acquiring or consuming resources by an organization.

DIFFERENT WAYS TO CATEGORIZE COSTS:

Fixed and Variable Costs.

Direct and Indirect Costs.

Product and Period Costs.

Other Types of Costs.

Controllable and Uncontrollable Cost.

Out-of-pocket and Sunk Costs.

Incremental and Opportunity Costs.

Imputed Costs.

The objective of the cost accounting is to determine the methods by which expenditure on materials, wages and overhead are recorded, classified and allocated. This is necessary so that the. cost of products and services may be accurately ascertained.

Cost Accounting - Elements of Cost

Direct or Indirect Materials. The materials directly contributed to a product and those easily identifiable in the finished product are called direct materials.

Direct Labor.

Overheads.

Answer 2

Answer:

Cost Accounting:

• Utilizing a variety of methods, such as budgetary control, standard costing, and inventory management cost accounting aids in cost control.
• At the beginning of the period, a budget is created for each cost component (materials, labor, and costs), and the actual expenses spent are then compared to the budget.
• Any discrepancy between the desired outcomes and the actual outcomes is examined, and remedial measures are made as needed.
• The business is more effective as a result.

Cost Accounting helps businesses as:

Determination and Analysis of Cost

• Calculating the cost of goods or services is the primary goal of cost accounting.

This entails:

• the process of gathering and evaluating expenditures
• the evaluation of various product production at various manufacturing stages
• connecting production and costs
• Cost accounting tracks costs and revenues for each department, procedure, task, and sales region to determine costs and assess the operational effectiveness of each company division.

Cost Control

• A company's goal in the age of competition is to keep expenses as low as possible while maintaining effective operational conditions.
• For the money spent or its recovery to be maximized, each cost item must be examined in the context of the benefits or services received.
• Planning is required for this, as is the adoption of the standard for each cost item, which guarantees that deviations can be found and, appropriately, addressed.

Aligning Cost With Revenue

• To show the cost and income information related to the period's sales, cost accountants create monthly or quarterly statements.

Assisting Management

• Cost accounting helps a corporation to determine not only the actual cost of certain tasks, goods, and services but also the cost they should have incurred.
• Finding losses and wastages makes it easier to prevent them in the future.
• Special cost studies and investigations play a part in establishing rules and creating strategies for successful operations, which is another way that cost accounting helps management.

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