The records must serve as a basis to guide the future. The records to be maintained must facilitate comparison over some time. The benefit should be out weight than cost. The costs of operating the costing system must be cost-effective and economical. It must be capable of expansion or alteration depending on the needs of the business. The cost accounting system should be capable of adapting itself to the changing situations of business. The cost accounting cycle is a process performed during the accounting period in recording data, classifying, determining total cost, determining product cost, determining selling price, controlling cost, and decision making. Management of a manufacturing or service organization, private sector or public sector organization, profit-making or non-profit-making organization, the military or civilian organization would make sure that cost accounting is accorded the necessary attention it deserves. Cost Accounting, a subject that provides management with information relating to costs, is a service to management. The ‘process’ refers to day to day routine of determining costs within the method of costing adopted by a business enterprise.Ĭosting involves the classifying, recording, and appropriate allocation of expenditure for the determination of costs of products or services, the relation of these costs to sales value and the ascertainment of profitability. The technique refers to principles that are applied to ascertain the costs of products, jobs, processes, and services. In the widest usage, it embraces the preparation of statistical data, application of cost control methods, and the ascertainment of profitability of activities carried out or planned.Ĭosting includes the techniques and processes of ascertaining costs. Factors to Be Considered in Selecting Method of Remuneration/incentive planĬost accounting is the process of accounting from the point at which expenditure is incurred or committed to the establishment of its ultimate relationship with cost centers and cost units.Differences between Cost Accounting and Managerial Accounting. ![]() Difference between Cost Accounting and Financial Accounting. ![]()
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