Analysis of Cost Accounting

In: Business and Management

Submitted By shannoncarl
Words 2748
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Shannon Carl
ACC 310 Cost Accounting 1
Analysis of Cost Accounting
Jess Stern

“Cost accounting is a type of accounting process that aims to capture a company’s costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment.”( Cost Accounting, 2012). By analyzing the importance of cost accounting to the success of a firm, we will get a better understanding as to why companies use this type of accounting process. Becoming knowledgeable about the various methods of cost accounting and how they are used will enable the company to operate the process appropriately. Understanding how an operating budget works to discipline a firm’s management is also useful information when running a company. To do so, one needs to know the actual elements of the budget and how they are constructed. Lastly, one more beneficial piece of information to comprehend would be what a variance analysis is and how it is used. In the midst of discussing the previous items, there will be various elements that relate to the above topics in which there will be further detail provided. First, why is cost accounting so important to the success of the firm? “Managers rely on cost accounting to provide an idea of the actual cost of processes, departments, operations or product which is the foundation of their budget, allowing them to analyze fluctuation and the way funds are used socially for profit” (Llango, 2009). It is believed that if more companies had better cost accounting, there wouldn’t be the issues there are in the downturn in the economy today. “Businesses that understand cost accounting do well in these economic times and are more profitable than their competitors” (Wright, 2009). “Cost accounting helps managers make better decisions by providing key information for planning and…...

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