SCOPE OF COST ACCOUNTING
Scope of cost accounting consists of the following functions:
(i) Costing: Costing is the technique and process of ascertaining costs of products or services. The cost ascertainment procedure is governed by some cost accounting principles and rules. Generally, cost is ascertained using some arithmetical process.
(ii) Cost Accounting: This is a process of accounting for cost which begins with the recording of expenditure and ends with the preparation of periodical statement and reports for ascertaining and controlling cost. Cost Accounting is a formal mechanism of cost ascertainment.
(iii) Cost Analysis: It involves the process of finding out the factors responsible for variance in actual costs from the budgeted costs and accordingly fixation of responsibility for cost differences. This also helps in better cost management and strategic decisions.
(iv) Cost Comparisons: Cost accounting also includes comparisons of cost from alternative courses of actions such as use of different technology for production, cost of making different products and activities, and cost of same product/ service over a period of time.
(v) Cost Control: It involves a detailed examination of each cost in the light of advantage received from the incurrence of the cost. Thus, we can state that cost is analyzed to know whether cost is exceeding its budgeted cost and whether further cost reduction is possible.
(vi) Cost Reports: This is the ultimate function of cost accounting. These reports are primarily prepared for the use by the management at different levels. Cost Reports helps in planning and control, performance appraisal and managerial decision making.
(vii) Statutory Compliances: Maintaining cost accounting records as per the rules prescribed by the statute to maintain cost records relating to utilization of materials, labour and other items of cost as applicable to the production of goods or provision of services as provided in the Act and these rules.
Scope of cost accounting consists of the following functions:
(i) Costing: Costing is the technique and process of ascertaining costs of products or services. The cost ascertainment procedure is governed by some cost accounting principles and rules. Generally, cost is ascertained using some arithmetical process.
(ii) Cost Accounting: This is a process of accounting for cost which begins with the recording of expenditure and ends with the preparation of periodical statement and reports for ascertaining and controlling cost. Cost Accounting is a formal mechanism of cost ascertainment.
(iii) Cost Analysis: It involves the process of finding out the factors responsible for variance in actual costs from the budgeted costs and accordingly fixation of responsibility for cost differences. This also helps in better cost management and strategic decisions.
(iv) Cost Comparisons: Cost accounting also includes comparisons of cost from alternative courses of actions such as use of different technology for production, cost of making different products and activities, and cost of same product/ service over a period of time.
(v) Cost Control: It involves a detailed examination of each cost in the light of advantage received from the incurrence of the cost. Thus, we can state that cost is analyzed to know whether cost is exceeding its budgeted cost and whether further cost reduction is possible.
(vi) Cost Reports: This is the ultimate function of cost accounting. These reports are primarily prepared for the use by the management at different levels. Cost Reports helps in planning and control, performance appraisal and managerial decision making.
(vii) Statutory Compliances: Maintaining cost accounting records as per the rules prescribed by the statute to maintain cost records relating to utilization of materials, labour and other items of cost as applicable to the production of goods or provision of services as provided in the Act and these rules.
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