Purpose of Cost Accounting Information
Cost accounting is employed for a number of reasons, some of that are briefly described in the given points as:
a) Accounting for costs
This may be seen like a record keeping or score maintaining role. Information should be gathered and analyzed in a manner that will help in planning, decision and control making
b) Planning and Budgeting
This includes the quantification of plans for the future operations of the enterprise; that plans may for the short or long term, for the enterprise like a whole or for the individual aspects of enterprise.
c) The control of the operations of the enterprise
Control may be assisted via the comparison of actual cost information along with that involved in the plan. Any type of differences between actual and planned events can be investigated and then corrective action implemented like suitable
d) Decision Making
Cost accounting information assists in the creation of decisions concerning the future operations of the enterprise; that decisions creation may be assisted via the information from cost volume and cost- techniques– profit analysis.
e) Resource allocation decisions
As an example: product pricing in determining where to reject or accept jobs. It is based on cost and revenue implications of relevant decisions
f) Performance evaluation
To measure and evaluate actual performance, cost accounting information is used and so like to make a decision of the degree of efficiency or optimality of resource utilization.