Costing Leaders

tandard cost accounting  is a traditional  cost accounting  method introduced in the 1920s,  as an alternative for the traditional cost accounting method based on  historical costs Overview tandard cost accounting uses  ratios  called  efficiencies  that compare the labor and materials actually used to produce a good with those that the same goods would have required under "standard" conditions. As long as actual and standard conditions are similar, few problems arise. Unfortunately, standard cost accounting methods developed about 100 years ago, when labor comprised the most important cost of manufactured goods. Standard methods continue to emphasize labor efficiency even though that resource now constitutes a (very) small part of the cost in most cases. Standard cost accounting can hurt managers, workers, and firms in several ways. For example, a policy decision to increase inventory can harm a manufacturing manager's...

Cost accounting  is a process of recording, classifying, analyzing, summarizing, allocating, and evaluating various alternative courses of action for the control of costs. Its goal is to advise the  management  on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future. [1] Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, information must be relevant for a particular environment. Cost accounting information is commonly used in  financial accounting  information, but its primary function is for use by managers to facilitate making decisions.

Financial accounting aims at finding out results of accounting year in the form of Profit and Loss Account and Balance Sheet. Cost Accounting aims at computing cost of production/service in a scientific manner and facilitate cost control and cost reduction. Financial accounting reports the results and position of business to government, creditors, investors, and external parties. Cost Accounting is an internal reporting system for an organization’s own management for decision making. In financial accounting, cost classification is based on type of transactions, e.g. salaries, repairs, insurance, stores etc. In cost accounting, classification is basically on the basis of functions, activities, products, process and on internal planning and control and information needs of the organization. Financial accounting aims at presenting ‘true and fair’ view of transactions, profit and loss for a period and Statement of financial position (Balance Sheet) on a given date. It aims at computi...