Cost Accounting in Company - 7 Extraordinary Objectives of Cost Accounting for Bottom-Line Profits

For knowing Extraordinary Objectives of Cost Accounting for bottom-line profit , you should learn the basic fundamental of cost and costing and cost accounting and after this you can understand What Are the Extraordinary Objectives of Cost Accounting for bottom-line profit ?

Definition of Cost

Cost may be define as the price of any asset when one company purchases it or it may the expenses for getting services . So , we can say that cost is total amount which is sacrificed for getting the goods , services and assets .

In general , cost is calculated on production of goods . Total cost represents cost of raw material , cost of labour and cost of overheads after adding above we can find total cost and if we divide total numbers of units , then we can find cost per unit . [ Solution of Cost Problem link]

Definition of Costing
Costing is technique to determine the cost. It involves the process and method to classify and analysis of different expenditures.

Definition of Cost Accounting

Cost accounting is science of recording , classify , analyzing and allocation of cost to cost centers or cost unit . It also include cost control .

Cost accounting = Accounting used → { [ determine the cost + control the cost] }
Specific Order Costing
Operation Costing
Job Costing
Contract Costing
Batch Costing
Process Costing
Standard Costing
Cost Budget
Marginal Costing

Objective of Cost accounting

1. To determine the cost

It is the objective of cost accounting that cost accountant has to determine the cost because, after this cost per unit, price per unit can be calculated and product can be sold in market .

2. To analyze of cost
Under this objective , cost is calculated after analyze which is done in cost sheet by knowing different elements and writing in specific head .

3. To reduce the Wastage

Cost accounting’s main objective is to reduce the wastage , Wastage may be in material , labour cost or overhead cost . Cost accountant makes cost sheet and after this he compares it with standard cost and with this can find at where wastage are incurred and after this he can reduce it by making proper control .

4. Provide cost data
There are large no. of previous records of cost of different products are available, if cost accounting is maintained by accounting department. It can be given to other department for taking decision. It is the another objective of cost accounting .

5. Ascertain the profitability

We know that cost accounting is to determine cost and with this cost we can find profit margin

6. Control the cost

Cost accounting’s objective is to control the cost . For example Over stocking and under stocking is loss of money by using cost control techniques in stock maintaining , we can keep optimum level of stock to control the cost of stock .

7. Advicing the management

Cost accountant can advice to management for achieving the objectives of cost accounting

· At what cost , should any asset show in books of company ?
· He will suggest how many cost centers are needed for effective control over cost .
· He can solve different cost related problems in the company.

Alexander Dusty of President of Global Shop Solutions's thought on Objectives of Cost Accounting .
" cost accounting provides a richer information base for operations
management. The collection, classification, and determination of cost through
accounting becomes, then, a means by which efficiencies are discovered and
implemented. To the extent that these implementations offer a greater return on
investment, and perhaps a greater dividend to shareholders, cost accounting can
be said to truly help build the bottom-line profit.


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Accounting Education: Cost Accounting in Company - 7 Extraordinary Objectives of Cost Accounting for Bottom-Line Profits
Cost Accounting in Company - 7 Extraordinary Objectives of Cost Accounting for Bottom-Line Profits
Accounting Education
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