1. Ascertainment of Cost: The 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 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.
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.
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.
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.
internal decision making and minimise waste.
