COST ACCOUNTING

Cost Accounting

Cost Accounting

In management accounting, cost accounting is the process of tracking, recording and analyzing costs associated with the products or activities of an organization. Managers use cost accounting to support decision making to reduce a company's costs and improve its profitability (Adkerson 1977). As a form of management accounting, cost accounting does not have to follow standards such as GAAP, because it's primarily used for internal managers, rather than external users, and what to compute is instead decided pragmatically.

Every company whether it be manufacturing, distribution, retail, or service- needs to understand how to manage its gross profit. As gross profit pays for all the other costs of running the company as well as providing a net profit for the owners. That is why cost accounting is so important in maximizing gross profit, as through variance analysis you can find out what is costing you more than it should, and hopefully then you can reconcile the issue at get the cost back to the standards.

This subject does have an application to my future as I already talked about the importance of cost variance on a golf course relating to labor, any industry you work in cost accounting will be important as every little costs adds up toward the gross profit (Adkerson 1977). The key to this is to keep track of employees to make sure that they are on task and doing the job as efficiently as possible, as they are really the difference in making a comfortable profit and making nothing at all.

Cost accounting is a branch of accounting that deals with how current and future costs are classified, recorded, allocated and reported. The behaviors of these costs are analyzed and summaries are provided to management in order to make internal decisions. Appropriate performance and control changes ...