Main objectives of cost accounting can be described as follows:
1. Ascertainment Of Cost
This is the key objective of cost accounting to track and analyze the per unit cost of the product produced by the company. It helps to ascertain cost of each activity such as process, operation, job etc.
2. Fix Selling Price
Cost accounting provides base for determination of selling price of company’s product by ascertaining the cost of each product. It helps the management to fix the selling price of products and services.
3. Cost Control
Cost accounting helps the organization to control the cost of production by taking necessary steps to reduce wastage of materials, time and expense while carrying out the operation.
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4. Assisting In Decision Making
Cost accounting helps management in decision making such as make or buy decision, drop or continue decision, future expansion policies etc. It helps to make a choice out of two or more courses of action.
5. Ascertainment Of Profit
Cost accounting helps in tracking and ascertaining profitability of the product by preparing profit and loss account and balance sheet periodically.
6. Formulating Policies
Cost accounting plays important role to formulate policies of the organization. It provides necessary information and data to the top level management which are essential for framing marketing policies of the company.
7. Basis Of Financial Statement
Cost accounting is the foundation for the preparation of different financial statements (profit and loss account, balance sheet, trial balance etc.) of the company.
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