The importance and advance of cost accounting are presented below:
1. Helps in controlling cost:
Cost accounting helps in controlling cost by applying some techniques such as standard costing and budgetary control.
2. Provides necessary cost information:
It provides necessary cost information to the management for planning, implements and controlling.
3. Ascertains the total per unit cost of production:
It ascertains the total and per unit cost of production of goods and services that helps to fix the selling prices as well.
4. Introduces cost reduction programs:
It helps to introduce and implement different cost reduction programs.
5. Discloses the profitable and non profitable activities:
It discloses the profitable and non profitable activities that enable management to decide to eliminate or control unprofitable activities and expand or develop the profitable activities.
6. Provides information for the comparison of cost:
It provides reliable data and information which enable the comparison of cost between periods, volume of output, determent and processes.
7. Checks the accuracy of financial accounts:
It helps checking the accuracy of financial accounts. This is done by preparing cost reconciliation statement.
8. Helps invests and financial institutions:
It is also advantageous to investment and financial institutions since it discloses the profitability and financial position in which they intend to invest.
9. Beneficial to workers:
It is beneficial to workers as well since it emphasizes the efficient utilization of labor and scientific systems of wages payment.
