Question

Explain modern cost management accounting

Answer 1

This is an essential tool of business owners or top management understanding the cost structure of operation and how to minimize it. There are two types of accounts; one is financial accounting and the other is cost accounting. Financial accountant used to record inventory, cost of goods sold, manufacturing expenses, overhead expenses, etc. Cost account used to analyze these data for calculating cost-volume-profit relating to budget. It helps business a lot, like minimizing cost increases profitability; each and every corner of expenses is evaluated thoroughly for understanding how much is relevant. Earlier this system was only applicable for manufacturing sectors, but now it becomes necessary for service sectors too. Since this system is not statutory, the management of the business can create own way for performing it.