The Roles and Uses of Cost Accounting

Paper Summary:

This paper explains that cost accounting is a part of managerial accounting: Whereas financial accounting is concerned with recording actual financial transactions, managerial accounting is concerned with the discovery of relationships in financial data. The author points out that one of the critical factors involved in cost accounting is the differentiation of fixed costs, which must be borne by a firm regardless of activity levels, and variable costs, which fluctuate according to activity levels, so that managers are able to construct break-even charts and other decision-making and control tools. The paper states that the three principal functions of standard cost systems are (1) identifying the actual costs of operation, (2) determining the achievement of the production operation, and (3) evaluating the performance of the production operation.

Table of Contents
Introduction
Cost Accounting: Definition, Roles, Concepts, and Applications
Standard Costs
Transfer Prices
Summary

From the Paper:

"Production costs are also considered in the contexts of full costs, direct costs, indirect costs, job costs, process costs, standard costs, joint costs, and others. These costing concepts are all a part of the cost accounting process. Each of these concepts provides the manager with a different perspective of costs. These different perspectives may provide a means of enhancing the efficiency of an operation, without damaging the integ?rity of the firm, even though most of the costs derived through the application of these concepts of costs will differ from the costs derived through the application of financial accounting concepts. The use of costs derived through the application of these managerial accounting concepts permits managers to make valid and rapid decisions on the basis of performance variances from managerial accounting cost factors or ratios."

More papers on The Roles and Uses of Cost Accounting:

• Term Paper # 105502 : "History of Accounting"
• Essay # 1332 : "An Explanation of the Principles and Uses of Supercritical Fluid Chromatography"
• Analytical Essay # 148069 : "Credit Management under Globalization"

APA Citation:

MLA Citation: