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Advantages And Disadvantages Of Cost Accounting

1804 Words8 Pages

The process of collecting, recording, classifying, analyzing, summarizing, allocating and evaluating various alternative to derive cost as while operating the business is termed as cost accounting. Its basic aim is to advise the management to follow the most appropriate course of action based on the cost efficiency and capability of the organization. A detailed cost information that is required by the management to control current operations in other words the variable cost and plan for the future, is provided through cost accounting only.

As the decision taken by the managers are organization specific in other words they take decisions on keeping in mind their own organization only there is no need for the information to be compared to similar information from other organizations because when a manager takes such a decision he has already made a competitive. Instead, information which is gathered must be relevant for a particular type of environment. Cost accounting information thus …show more content…

As a result, huge variety is seen in the cost accounting systems of the different companies and sometimes even in different parts of the same company or organization.

Different types of businesses, whether it is service or manufacturing or trading, require cost accounting to track their cost incurred in each activity activities. Cost accounting from times historical times used to help managers understand the costs of running a business. Modern cost accounting got its origin during the industrial revolution only, when the complexities of running a large scale business aroused it led to the development of systems for recording and tracking costs. This would help the business owners and managers to take business related

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