The use of accounting in the business field to measure an entity in many aspects regarding financial information is crucial in modern day. Tracking how a business obtain, spends, and invest their financial assets are key indicators for not only external users such as investors and creditors, but internal users such as management departments. To plan for future endeavors, one must understand their present capabilities. Through extensive research, we can establish why cost accounting is important to the success of the firm, various methods of cost accounting, and how they are used.
From the process of analyzing current needs to allocation of costs for present and future requirements and projects, the use of cost accounting is very important …show more content…
Job costing is used for specific products, while process costing is used for more general products. In other word, job costing is made for small production purposes, while process costing best fits bigger recurring and non-recurring production. A product such as a limited-edition car made by an automotive manufacturer such as Audi and only five of those products were made, job costing would be the preferred method used for production cost. The standard cars such as Audi A4’s that are made by the thousands would use the process costing, although if there are specific requirements, they can use a hybrid of the two systems to meet their end …show more content…
Cost accounting has various methods that are applied to specific conditions to aid a company in their goals. Standard cost, activity-based costing, job costing, and process costing are all methods in which cost accounting is liable to provide adequate measurements and analysis on cost control. Standard cost focuses on budgeting for overhead and volumes for allocation base. Budgeting is crucial to forecast out the future and plan accordingly with minor variances. ABC is used to evaluate the most accurate cost of production of each unit. Job costing is used for. According to Lanen et al. (2011), “Job costing concepts are used when products are easily identifiable as individual units or batches of identical units” (p. 246). Process costing is used for more similar products that follow the same path to finished goods, and ultimately to cost of goods sold. A cost accountant must be professional and ethical regarding their job as they play a crucial role in business management of cost control. Incorrect calculations can throw a management department decision making off, thus this job is very important to have fine attention to detail along with integrity to report and do the right thing by the standards expected of
From the process of analyzing current needs to allocation of costs for present and future requirements and projects, the use of cost accounting is very important …show more content…
Job costing is used for specific products, while process costing is used for more general products. In other word, job costing is made for small production purposes, while process costing best fits bigger recurring and non-recurring production. A product such as a limited-edition car made by an automotive manufacturer such as Audi and only five of those products were made, job costing would be the preferred method used for production cost. The standard cars such as Audi A4’s that are made by the thousands would use the process costing, although if there are specific requirements, they can use a hybrid of the two systems to meet their end …show more content…
Cost accounting has various methods that are applied to specific conditions to aid a company in their goals. Standard cost, activity-based costing, job costing, and process costing are all methods in which cost accounting is liable to provide adequate measurements and analysis on cost control. Standard cost focuses on budgeting for overhead and volumes for allocation base. Budgeting is crucial to forecast out the future and plan accordingly with minor variances. ABC is used to evaluate the most accurate cost of production of each unit. Job costing is used for. According to Lanen et al. (2011), “Job costing concepts are used when products are easily identifiable as individual units or batches of identical units” (p. 246). Process costing is used for more similar products that follow the same path to finished goods, and ultimately to cost of goods sold. A cost accountant must be professional and ethical regarding their job as they play a crucial role in business management of cost control. Incorrect calculations can throw a management department decision making off, thus this job is very important to have fine attention to detail along with integrity to report and do the right thing by the standards expected of