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OBJECTIVES AND

FUNCTIONS OF COST

ACCOUNTING

SHANTANU TYAGI-73

NEERAJ SIROHI-43

PRASHANT RAJ-53

RISHIKA SRIVASTAVA-63

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WHAT IS COST ACCOUNTING

Cost accountingis a process of

collecting, analyzing, summarizing

and evaluating various alternativecourses of action. Its goal is to

advise the management on themost appropriate course of action

based on the cost efficiency and

ca abilit

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ORIGIN

Modern cost accounting originated duringthe industrial revolution, when thecomplexities of running a large scale

business led to the development ofsystems for recording and tracking coststo help business owners and managers

make decisions. In the early industrialage, most of the costs incurred by abusiness were what modern accountants

call "variable costs" because they varied

http://en.wikipedia.org/wiki/Industrial_revolutionhttp://en.wikipedia.org/wiki/Variable_costhttp://en.wikipedia.org/wiki/Variable_costhttp://en.wikipedia.org/wiki/Industrial_revolution

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OBJECTIVES OF COST ACCTG.Ascertainment of Cost :

Ascertainment of cost of each product, process

or operation as well as total costs tofix selling price.

Ascertainment of Profitability :Identification of profitable and unprofitable

products to imp

profitability.

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Classification of Cost :Cost accounting classifies cost in to different

elements such as materials, laborer andexpenses. It has further been divided as direct

cost and indirect cost for cost control and

recording.

Control of Cost :Detection and prevention of "wastage, leakage

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Assistance :Assistance in various policy decisions like,

make or buy, introductions new product,utilization of idle capacity, replacement of

plants etc.

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FUNCATIONS OF COST ACCTG.

Ascertainment of cost of products: CostAccounting ascertains cost of production ofeach job, process, or work order by applying

different methods of cost accounting, such asjob costing, process operation costing,contract costing etc. according to thesuitability and needs of the organization.

Fixation of selling prices: Cost accountinghelps to find out cost of production and

fixation of selling prices of the product or

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Measurement of efficiency: Cost

accounting measures the efficiency of each

product, process or departments by applying

standard cost method.

Cost control procedures: Cost accounting

controls cost by setting standards and

compared with the actual. The deviation

between them are identified and if required

necessary controlling measures may be

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Reporting to the Management: Cost

accounting reports to the management

periodically which may be monthly, quarterly

or half yearly. According to the reports of thecost accounting, the management takes

necessary decisions.

V

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C.A VF.A

Financial accounting aims at finding out

results of accounting year in the form of

Profit and Loss Account and Balance Sheet.

Cost Accounting aims at computing cost ofproduction/service in a scientific manner and

facilitate cost control and cost reduction.

Financial accounting reports the results and

position of business to government,

creditors, investors, and external parties.

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In financial accounting, cost classification

based on type of transactions, e.g. salaries,

repairs, insurance, stores etc. In cost

accounting, classification is basically on thebasis of functions, activities, products,

process and on internal planning and control

and information needs of the organization.

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CONCLUSION:

Cost accounting information is designed formanagers. Since managers are takingdecisions only for their own organization,

there is no need for the information to becomparable to similar information from otherorganizations. Instead, the important criterionis that the information must be relevant to

decisions that managers operating in aparticular environment of business includingstrategy make. Cost accounting informationis commonly used in financial accountinginformation, but first concentrating in its use

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REFEREN

CES Investopedia.com

Cost Accounting - V. Rajasekaran; R. Lalitha

Wikipedia, the free encyclopedia Knowledge Hub

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THANK YOU