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Cost Accounting
Cost accounting has been defined via many accounting scholars in different forums. There is no single watertight definition of cost accounting, however the various definitions all point to specific common aspects to the subject. Underneath are some definitions provided by certain authorities as:
"That part of management accounting such establishes standard costs and budgets and actual costs of processes or operations, products or departments and the analysis of variances, social or profitability use of funds" by Chartered Institute of Management Accountants - CIMA. "Which identities, such defines measures, analyses and reports the different elements of indirect and direct costs associated along with producing and marketing goods and services. However Cost accounting measures performance, productivity of quality and product quality" by Letricia Gayle Rayburn. "The systematic process of summarizing and collecting, recording data regarding the different resources and activities into a firm hence like to calculate the basis of production costs employed in financial accounting or making another relevant decisions in a firm by Horngren C.T
Conversely Cost accounting is broad and extends beyond to calculate production costs for inventory valuation that government-reporting requirements largely dictate. Though accountants do not permit external reporting requirements to find out how they measure and control internal organizations activities. During this fact, cost accounting focus is shifting for financial reporting from inventory valuation to costing for decision making. The most important objective of cost accounting is communicating financial information to management for planning, evaluating and controlling performance, and to assist management also to create more informed decisions. Its data is employed by managers to guide their decisions.
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what is the purpose of cost accounting and its nat ure?
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Relationship among Financial Accounting and Cost Accounting The difference among management and cost accounting may be highlighted by using a number of questions namely as;
BEP- Break Event Point: It shows no Loss and no Profit The level of activity at which, total revenues equivalent total costs. A point at which there is no profit and no loss.
Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling pri
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