Question

Why do we need to monitor cost accounting؟؟

Answer 1

Meaning of cost accounting:

Cost accounting is a process of recording, analyzing and reporting all of a company’s costs related to the production of a product. The costs may be variable costs, fixed costs or mixed costs. This helps company’s management in making better financial decisions, introduce efficiencies and budget accurately.

Reason why company needs to monitor cost accounting:

Monitoring cost accounting helps the company to budget properly for future, be efficient in production and also helps in maximizing the profits. i.e.,

1. When a business has a better idea of exactly how its money is being spent, it can better budget for the future.

2. Examination of a company’s processes will result in ways to improve them.

3. If a company makes its production processes more efficient, it implies that company is producing more output for lower costs. Hence it increases the profits of company.

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