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8/13/2019 Objectives and Functions of Cost Accounting
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OBJECTIVES AND
FUNCTIONS OF COST
ACCOUNTING
SHANTANU TYAGI-73
NEERAJ SIROHI-43
PRASHANT RAJ-53
RISHIKA SRIVASTAVA-63
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WHAT IS COST ACCOUNTING
Cost accountingis a process of
collecting, analyzing, summarizing
and evaluating various alternativecourses of action. Its goal is to
advise the management on themost appropriate course of action
based on the cost efficiency and
ca abilit
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ORIGIN
Modern cost accounting originated duringthe industrial revolution, when thecomplexities of running a large scale
business led to the development ofsystems for recording and tracking coststo help business owners and managers
make decisions. In the early industrialage, most of the costs incurred by abusiness were what modern accountants
call "variable costs" because they varied
http://en.wikipedia.org/wiki/Industrial_revolutionhttp://en.wikipedia.org/wiki/Variable_costhttp://en.wikipedia.org/wiki/Variable_costhttp://en.wikipedia.org/wiki/Industrial_revolution8/13/2019 Objectives and Functions of Cost Accounting
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OBJECTIVES OF COST ACCTG.Ascertainment of Cost :
Ascertainment of cost of each product, process
or operation as well as total costs tofix selling price.
Ascertainment of Profitability :Identification of profitable and unprofitable
products to imp
profitability.
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Classification of Cost :Cost accounting classifies cost in to different
elements such as materials, laborer andexpenses. It has further been divided as direct
cost and indirect cost for cost control and
recording.
Control of Cost :Detection and prevention of "wastage, leakage
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Assistance :Assistance in various policy decisions like,
make or buy, introductions new product,utilization of idle capacity, replacement of
plants etc.
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FUNCATIONS OF COST ACCTG.
Ascertainment of cost of products: CostAccounting ascertains cost of production ofeach job, process, or work order by applying
different methods of cost accounting, such asjob costing, process operation costing,contract costing etc. according to thesuitability and needs of the organization.
Fixation of selling prices: Cost accountinghelps to find out cost of production and
fixation of selling prices of the product or
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Measurement of efficiency: Cost
accounting measures the efficiency of each
product, process or departments by applying
standard cost method.
Cost control procedures: Cost accounting
controls cost by setting standards and
compared with the actual. The deviation
between them are identified and if required
necessary controlling measures may be
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Reporting to the Management: Cost
accounting reports to the management
periodically which may be monthly, quarterly
or half yearly. According to the reports of thecost accounting, the management takes
necessary decisions.
V
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C.A VF.A
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 ofproduction/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.
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In financial accounting, cost classification
based on type of transactions, e.g. salaries,
repairs, insurance, stores etc. In cost
accounting, classification is basically on thebasis of functions, activities, products,
process and on internal planning and control
and information needs of the organization.
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CONCLUSION:
Cost accounting information is designed formanagers. Since managers are takingdecisions only for their own organization,
there is no need for the information to becomparable to similar information from otherorganizations. Instead, the important criterionis that the information must be relevant to
decisions that managers operating in aparticular environment of business includingstrategy make. Cost accounting informationis commonly used in financial accountinginformation, but first concentrating in its use
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REFEREN
CES Investopedia.com
Cost Accounting - V. Rajasekaran; R. Lalitha
Wikipedia, the free encyclopedia Knowledge Hub
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THANK YOU