Why do We Study Cost Accounting

>> October 1, 2010


One of my reader from Dhaka Bangladesh searched this question on his opera mobile set because he did not get his answer. So, today, I am trying to give its answer.


1st Reason : To Reduce Expenses


We study cost accounting because we are interested to reduce our expenses. Cost accounting teaches us, how can you reduce reduce expenses. It identify the area where we can save cost.


2nd Reason : To Make Us Rational


Continue study of cost accounting makes us rational regarding the decision of buying raw material and using labors and other overheads in production process.With cost accounting, we can reduce misuse of resources of company.


3rd Reason : Variance and its Treatment


In cost accounting, we make budget of overheads and after this we can calculate variance of overheads. By checking under-absorbed overheads, we can treat it correctly.


4th Reason : To Determine the Prices


To study cost accounting is very necessary because it is helpful to determine the prices of products correctly.


5th Reason : To Control the Cost


Advance study of cost accounting will be helpful to control the cost of each product and of each cost center.





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