Scope and Methods Applied in Cost Accounting

The scope of cost
accounting is very wide. There are lots of techniques, tools, procedures,
processes, programs used in cost accounting for calculating cost and its control.
But basically, we divide its scope within three major parts.

1.    Cost Ascertainment: In this
region of cost accounting, cost accounting collects product’s material, labour
and overhead cost and try to calculate total and per unit cost of product. The
total cost calculation will be based on historical or standard or estimated
basis. After this, cost account will use any method of costing like specific
order costing, operation costing and direct costing technique. These techniques
and methods may be used for calculating different nature products in same
organisation.
2.    Cost Records
In
this part of cost accounting, cost accountant maintains cost books, vouchers,
ledgers, reports and other cost related documents for future comparison and
reference.
3.    Cost Control

This
is the end boundary of cost accounting scope. In this division, cost accountant
used different techniques and methods for controlling the cost. Saving One
Naira in the cost of product means we have earned One Naira in the production
of goods. So cost accountant uses budgetary control, standard costing, break-even
point analysis and many other techniques for controlling the cost.

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