Meaning of cost accounting notes pdf
Question 1. What is cost accounting? Describe its benefits.
What is Cost accounting ? Discuss the benefits of cost accounting.
Meaning and Definition of Cost Accounting
(Meaning and Definition of the Cost Accounting)
Cost accounting in the accounts of this type were known to the item or service the product from the respective different expenses or services, the distribution of this type to be able to make the object or service the total and per unit cost is known that could and professional control and policy determination of the for
Necessary numbers and information can be obtained. In other words, in the cost accounts, various expenses are analyzed by scientific method so that the total cost of doing any work and production of a commodity and the value of the total services etc. are accurately ascertained. In fact, the information provided by cost accounting makes it possible to analyze, control and analyze the cost.
The following definitions of cost accounting have been given by leading scholars.
“ Cost account refers to the classification, accounting and distribution of expenses properly, so that the cost of production of goods or services produced can be known. Proper and systematic data are presented in such a way that the administrators are guided and facilitated in their management work. It determines the cost of each contract, procedure, service or unit and gives the costs of production, sales and distribution. “
-Harald J. Halden “Cost accounting is an assortment of expenditures that allows the total cost of a particular unit of production to be accurately determined as well as how the total cost is derived.”
Dalter W. “Cost accounts are a method of accounting under which the material and labor used to make a specific groom or to perform a specific work is kept.”
“Cost accounting disburses expenses in such a way that it makes sense of proper costs and presents it in such a way that producers can control their business through its guidance.”
“Cost accounting is a science or method that intelligently presents all those key elements per unit of a particular production function or service. Which made their cost. Such as material, labor, other direct and indirect expenses. ” – R.S. Davar
Therefore, based on the appropriate definition, it can be said that there is a type of cost accounting system by which the cost is determined in different processes of production. Simultaneously, cost accounting also helps in increasing the profitability by controlling the cost, determining future policies and planning.
Cost accounting objectives
Objects of Cost Accounting
Some of the major objectives of cost accounting are as follows:
(1) To find the total and cost per unit of production.
(2) To analyze and classify the units produced.
(3) Determination of object and tender values.
(4) To control the cost of production, to find out the inadvertent and wastage in construction work and to prevent them.
(5) Making beneficial plans for the future related to production.
(6) To make an estimate for the future by knowing the capability of the present machine and technology.
(7) To determine the best methods for removing the defects of production and management.
(8) Knowledge of sources of profit and loss by matching different cost accounts.
(9) To provide assistance in making final account.
(10) To bring economies in the production work keeping in mind the size of the production and the design of the factory, etc.
Cost accounting for work
(Functions of Cost Accounting)
(1) Cost Determination –
The cost of production of various goods manufactured by cost accounts is determined. On various tasks, processes and contracts
For different reasons
(2) Presentation of data for future plans
The cost account presents the appropriate numbers so that producers can determine the prices of various goods and determine the quantity of production to be made in the future.
(3) Cost control (Cost Control)
The major function of cost accounting is to control costs so that more and more production is done at the least cost. For this, budgetary control and standard control are used. Meaning of cost accounting notes
(4) Cost Analysis –
A detailed analysis of various expenses is made in the cost analysis. The differences are obtained by comparing these expenses with the expenses of the previous period and comparing them with the standard cost.
(5) Determination of selling price
The main function of cost accounting is also to determine the fair selling price so that competition can be faced and fair profit can be made.
(6) Measurement of Effeciency of Different Departments
Under the cost accounting, proper distribution of their work is done among the laborers and the proper method of payment of wages, budgetary control, etc. The performance of various departments is studied.
Cost accounting of the benefits and importance of
(Merits and Importance of Accounting)
The importance of cost accounts is increasing day by day because through it any organization studies its cost related problems and maximizes profit. Different categories have different benefits from cost accounts. The importance of cost accounts can be analyzed under the following headings
(I) producers and managers to take advantage (Advantages to producers and Managers) –
Producers and managers receive the following benefits from cost accounts in any organization.
(1) Best use of materials and plant.
(2) Assistant in financial accounts.
(3) Knowledge of useful and useful functions for business.
(4) Preparation of financial statements at any time.
(5) Analytical and comparative study of production cost.
(6) Assist in the determination of standard.
(7) Determining the fair selling price.
(8) To check the differences between standard cost and budgetary controls.
(9) Estimating work and tender grain.
(10) To find out the causes of profit and loss.
(11) Utility in recession.
(12) Preventing wastage.
(13) To formulate policies for the future.
(14) To overcome the problems of workers.
(II) Advantages to Workers
Through the cost accounts, the work done by each worker is determined, as a result of which each worker works according to his / her deadline and there is a reduction in wastage in the organization. Full details of the work of each employee are maintained and remuneration is paid accordingly. Thus, cost-related accounts increase the efficiency, income and productivity of workers. Meaning of cost accounting notes
(Iii) Advantages to Investors
Through cost accounts, the institution knows which institution to invest in so that maximum profit can be made. Knowledge of current and future profit sharing potential of the business. Due to the knowledge of the real state of the business through cost accounts, the trustees and lenders have full faith in them.
(IV) Advangates to consumers –
Production costs are reduced through cost accounts and the variety also improves as the work efficiency of the workers increases and the wastage also decreases due to keeping an account of the production. Thus, due to lower production costs, consumers get good quality goods at low prices. In this way producers provide consumers with satisfaction related to price and variety of goods.
(V) Advantages to Government
Detailed and analytical information of various industries is obtained through cost accounts, which helps the government to formulate important policies regarding the industries. Cost accounts play an important role in determining policies such as pricing, price control, income tax assessment, dividend payment, government protection, etc.
It is clear from the above discussion that keeping the cost accounts does not only benefit the producers, employers and lenders, but it benefits in every sphere of the society. These accounts benefit the government, consumers and the nation as a whole. The cost accounting system is adopted to increase the efficiency of government industries and enterprises. The cost line method is adopted to work even in an emergency situation.
Meaning of cost accounting notes