Describe the objective and advantages of cost accounting
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1. To ascertain the cost per unit of the different products manufactured by a business concern;
2. To provide a correct analysis of cost both by process or operations and by different elements of cost;
3. To disclose sources of wastage whether of material, time or expense or in the use of machinery, equipment and tools and to prepare such reports which may be necessary to control such wastage;
Advantages of Cost accounting
Cost object analysis. Revenues and expenses can be clustered by cost object, such as by product, product line, and distribution channel, to determine which ones are profitable or require further support.
Discovers causes. An effective cost accountant not only locates problems within a company, but also drills down through the data to determine the exact cause of the issue, and also recommends solutions to management.
Trend analysis. Costs can be tracked on a trend line to discover expense surges that may be indicative of long-term trends.
Modeling. Costs can be modeled at different activity levels. For example, if management is contemplating the addition of a second shift, cost accounting can be used to derive the additional costs associated with that shift.
2. To provide a correct analysis of cost both by process or operations and by different elements of cost;
3. To disclose sources of wastage whether of material, time or expense or in the use of machinery, equipment and tools and to prepare such reports which may be necessary to control such wastage;
Advantages of Cost accounting
Cost object analysis. Revenues and expenses can be clustered by cost object, such as by product, product line, and distribution channel, to determine which ones are profitable or require further support.
Discovers causes. An effective cost accountant not only locates problems within a company, but also drills down through the data to determine the exact cause of the issue, and also recommends solutions to management.
Trend analysis. Costs can be tracked on a trend line to discover expense surges that may be indicative of long-term trends.
Modeling. Costs can be modeled at different activity levels. For example, if management is contemplating the addition of a second shift, cost accounting can be used to derive the additional costs associated with that shift.
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Cost Accounting is a business practice in which we record, examine, summarize, and study the company's cost spent on any process, service, product or anything else in the organization. This helps the organization in cost controlling and making strategic planning and decision on improving cost efficiency.
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