1. Ascertainment of Cost: The
first and foremost purpose of cost accounting is to ascertain the cost using
various costing methods.
first and foremost purpose of cost accounting is to ascertain the cost using
various costing methods.
2. Determining and Controlling
Efficiency: A cost accountant must study the various
Efficiency: A cost accountant must study the various
operations involved in the manufacturing of products. This study will enable
him to render the service of measuring the efficiency of the organisation and
in doing so he will be able to devise means of exercising efficiency.
3. Determining the Selling Price: Cost
accounting provides detailed and relevant cost figures for determining the
selling price of products and services
accounting provides detailed and relevant cost figures for determining the
selling price of products and services
4. It
helps to determine the cost of raw materials consumed.
helps to determine the cost of raw materials consumed.
5. Preparation of Financial Statement: Where
cost accounts are kept, the ascertainment of the value of closing stock of raw
materials, work in progress and finished goods becomes easy and such financial
statements can be prepared monthly or even weekly.
cost accounts are kept, the ascertainment of the value of closing stock of raw
materials, work in progress and finished goods becomes easy and such financial
statements can be prepared monthly or even weekly.
6. It
aids internal decision making and minimise waste.
aids internal decision making and minimise waste.
