Scope of Cost Accounting

Institute of Cost and and Management Accountant of London defines Cost Accountancy, “ The application of costing and cost accounting principles, method and techniques to the science, art and practice of cost control and the ascertainment of profitability, It includes the presentation of information derived there from for the purpose of managerial decision making”.

Cost accounting is generally considered to be applied in manufacturing concern. But this opinion is not true in this modern age. Every business struggle for high profit by controlling ‘Cost’ where this technique is being used its mean Cost accounting is used.

Manufacturing firms, Wholesale, Retail business, Banks and other financial institution, Insurance companies, Transportation companies, Railway, Airlines, and Shipping companies and non profit organization like School, Universities means each and every business is applying Cost Accounting.

To control or to keep record of each entry that is directly or indirectly associated with ‘Cost’ is the responsible of cost department.

For example, Cost department analyze cost incurred by manufacturing, Marketing and administration department and furnish reports thereon for management assistance.

The source data for cost accounting is of non- accounting nature, these are in the form of material purchase, consumed, and transferred during operation. The cost accountant is dependent upon information provided by outsiders, believing it to be accurate and free from defects.

In the last we may conclude that cost accounting is relevant with internal managerial issues and we can summarize its function hereunder:-

1.    Find cost of good.

2.    Analyzed cost of good.

3.    Control cost of good.

Thank you very much,