Three Different Functions Of Cost Accounting
Cost Accounting is a process of collecting, analyzing, summarizing and evaluating various alternative courses of action. Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.
Describe three different function of cost accounting
Cost Accounting enables management computing production costs by fixed and variable elements. Cost Accounting concept is important because some costs tend to remain the same even during busy periods, unlike variable costs, which rise and fall with volume of work. Over time, these "fixed costs" have become more important to managers. Examples of fixed costs include the depreciation of plant and equipment, and the cost of departments such as maintenance, tooling, production control, purchasing, quality control, storage and handling, plant supervision and engineering. In the early nineteenth century, these costs were of little importance to most businesses. Besides, by using Cost Accounting techniques, total costs of production are more comprehensive and conclusive. This includes allocation of factory overhead to the ranges of products. These total production costs can be used to fix the best selling prices structure that ensures profitability of the company.
Cost Accounting enables the management simulating its breakeven points, i.e. at the sales volume
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