Cost Accounting Assignment
What is cost accounting?
Cost Accounting Assignment is a process of identification, registration and appropriate allocation of expenses to determine the cost of the product or service. It also helps the administration by presenting the data in order to control and guide the administration. It includes the determination of the cost of each order, work, contract, process, service or unit, as appropriate. It is about the cost of production, sale and distribution. According to Wheldon, “cost accounting is the application of the principles, methods and techniques of accounting and calculation of costs in the determination of costs and the analysis of savings / excess cost incurred in comparison with previous experience or with standards”. It also establishes budgets, standard cost and these are compared with real costs and budgets.
Characteristics of cost accounting The process of cost accounting. Income and expenses related to goods and services are recorded. Provides data for future estimates of budgets and costs. It involves presenting the right information to the right person at the right time so that it can be useful for management for planning, performance evaluation, control and decision making. Objectives of cost accounting Determine the cost per unit of a manufactured product. Dissemination of waste and preparation of reports that are useful for controlling waste. It provides information that helps to fix the price of the product. Determine the benefit of the product and advise on how it will be used efficiently. Advise management on future expansion policies and proposed capital projects. It helps management to plan, evaluate and control by presenting and interpreting the data.
Importance of cost accounting For administration:
administration is very beneficial after the introduction of cost accounting. Not only does it help the administration determine the prices of the product, but it also helps the administration to make important decisions related to the inventory and the various costs of the product.
investors are anxious to know the financial situation and profitability of the company. Investors must obtain the information before investing in the company, so this information that must be provided to investors is provided through cost accounting. To employees- Employees receive salaries for their work. Cost accounting helps management decide the salary / salary according to the efficiency of the employee. For the government, cost accounting is one of the main sources to provide reliable data to internal and external parties. Help government agencies determine the special tax and income tax. The government formulates fiscal policies, industrial policies, export and import policies based on the information provided by cost accounting. Limitations of cost accounting. The decisions are related to the future of the company, but the available data is passed. The cost of the previous year is not the same in the following year. Therefore, the cost data is not very useful. The determination of the cost depends on the total utilization of the capacity; if used partially, the cost may not be true. The costs are absorbed at predetermined rates. Therefore, there are possibilities of insufficient absorption and excessive absorption. The installation of the cost accounting system requires large expenses due to the maintenance of cost records. The System of Accounting of Rigid Costs does not serve for all purposes.
Difference between cost accounting and financial accounting.
Financial Accounting aims to know the result of the accounting year in the form of Profit and Loss Account and Balance Sheet. Whereas, cost accounting aims at reducing costs and controlling costs and also calculates the cost of production.
the objective of financial accounting is to provide information on financial performance and financial position. Cost accounting provides information on cost verifications to control costs and to make decisions about costs.
financial accounting records transactions in terms of money, while cost accounting records transactions in a meaningful way of materials, labor and other overhead costs. Data record: past financial accounting records, that is, historical data. It counts the costs and presents the budgeted estimated data. It makes use of both historical costs and predetermined costs.
financial information is used by investors, creditors, financial institutions, etc. The cost accounting information is used by the internal administration.
financial information is prepared for a defined period, that is, one year. The cost accounting information is prepared when necessary. Order Now