Cost accounting can be described as the process of accumulating, measuring, analyzing, interpreting and reporting cost information that is both useful and relevant to the internal and external stakeholders of a business entity. One of the many benefits of cost accounting is that it turns data into information, knowledge and wisdom about a business entity's operations that is useful for: measuring performance, reducing or managing costs, determining the fees or prices for goods and services, deciding to authorize, modify or discontinue a program or activity. Another benefit is that information on the costs programs and activities may be used as a basis to estimate future costs in preparing and reviewing budget requests.
Once budgets are approved and executed, cost information serves as a useful feedback on performance. Moreover, costs may be compared to known or assumed benefits to identify value-added and non-value added activities. “Reliable information on the cost of programs and activities is crucial for the effective management of a business entity's operations. Cost accounting is especially important for fulfilling the objective of assessing operational performance. The objective is to improve the efficiency and effectiveness of operations by furnishing program managers and others with... [continues]
Cite This Essay
(2011, 02). Cost Accounting. StudyMode.com. Retrieved 02, 2011, from http://www.studymode.com/essays/Cost-Accounting-600656.html
"Cost Accounting" StudyMode.com. 02 2011. 02 2011 <http://www.studymode.com/essays/Cost-Accounting-600656.html>.
"Cost Accounting." StudyMode.com. 02, 2011. Accessed 02, 2011. http://www.studymode.com/essays/Cost-Accounting-600656.html.