A Simple Guide to Understand the Objectives of Cost Accounting
Maintaining a record of finances is the most significant part of every organization’s management process. The cost accounting process is proficient for this. This process helps you measure and analyze the cost incurred in carrying out a particular activity. Cost accounting helps in evaluating the company’s cost of production by analyzing the input cost as well as the fixed cost. It assesses the costs of every step of production. It first measures and records all the cost individually and after that, it compares the input results to the actual results for measuring the financial performance of the organization.
Cost accounting is a crucial part of every organization. The students who are learning the cost accounting process can hire the cost accounting assignment writing help from the experts of BookMyEssay. However, in this blog, we would learn about the various objectives of cost accounting.
The Main Objectives of Cost Accounting:
Cost Ascertainment:The ascertain cost is further categorized into two various costs: Post costing and Continuous costing. The post costing refers to the analyses of the real information recorded in the financial books of the organization. It is majorly utilized in the “cost-plus contracts” in which the prices are determined on the basis of the actual cost. The Continuous costing, on the other hand, collects information about each aspect of the cost that has incurred for the completion of the process. It involves the careful estimate being prepared overheads. The costing is the continuous process. It is the key objective of cost accounting to track and analyze per unit cost of all the products that are being produced by the company.
Selling price determination:The market conditions strongly influence the selling price of the product. A business has no control over this. The selling price can be determined with the help of market constraints. In addition to this, it is also important to rely upon the cost data delivered through cost accounting.
Cost control:The cost control is the process which helps in controlling the production cost of the organization. It involves necessary measures to reduce wastage of materials, expenses and time while carrying out the production activity. It enhances productivity and protects the organization from unnecessary expenses. The cost of accounting actively contributes to the cost control process. To exercise the cost control following steps are measured:
- The objectives and goals are clearly determined
- Measurement of the performance
- The investigation of the reason for the failure of some particular activity.
- Taking corrective actions timely
Cost reduction:Most of the time people get confused between cost reduction and the cost control process. But these two are completely different terms. Cost reduction is concerned with the control of essential characteristics and product quality. It involves using genuine and permanent tactics to reduce manufacturing, administration and distribution cost of the organization.
Ascertaining the profit:The evaluation of the profit is done by comparing the cost with the revenue. The purpose of this objective is to determine the loss and profit of costing. The cost accounting is necessary for evaluating the profitability of the certain activity of the company. It also plays a major role in preparing the profit and loss account for the balance sheet.
These were the few objectives of cost accounting objectives. If you are looking for extensive details on this topic, then you can ask the experts of BookMyEssay for it. We provide top-class assignment writing help service in Delhi. So instead of asking “who can do my assignment for me?”, hire them now for hassle-free accounting assignment writing services.