In a broad aspects, Cost Accounting is a method of accounting in which all costs incurred in carrying out an activity or accomplishing a purpose are collected, classified, and recorded. This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible. So Cost Accounting consists of the identification, measurement, collection, analysis, preparation, and communication of financial information For example, calculating the cost of product is a cost accounting function that answers manager’s decision making needs. Cost accounting information helps the manager in short-run and long-run planning and control decisions that increase value for the customers and lower the costs of products and services. For example, managers make decisions regarding the amounts and kinds of material being used, changes in plant processes, and changes in product designs. Cost Accounting in Decision Making:
Cost accounting serves the decision-making needs of managers and facilitates the management process inside an organization. Management processes comprise four major activities. Planning: A business plan revolves around the strategic aspects of a project and is intended to allow the project manager and core team make intelligent and educated day-to-day decisions by helping organize and put in place a series of resources commensurate with the objective to be achieved. Traditionally, business plans were not included in the typical project to-do list? Regardless of this unfortunate antecedent, experts in the field of project management who have practiced and taught this discipline for many years strongly recommend including a business plan when setting the basis for a newly assigned project. Cost accounting can provide long- and short-term planning tools for financial forecasting, budgeting, pricing decisions, cost-volume-profit analysis, break-even analysis and more. Disorganization and Implementation: Implementation plan to indicators of success if the plan is not being followed as expected, then consider: Was the plan realistic? Are there sufficient resources to accomplish the plan on schedule? Should more priority be placed on various aspects of the plan? Should the plan be changed? Much of what managers and supervisors do is solve problems and make decisions. New managers and supervisors, in particular, often make solve problems and decisions by reacting to them. They are "under the gun", stressed and very short for time. Consequently, when they encounter a new problem or decision they must make, they react with a decision that seemed to work before. It's easy with this approach to get stuck in a circle of solving the same problem over and over again. Therefore, as a new manager or supervisor, Cost accounting helps managers quantify their resources in order to implement their plans. Control: Determined variety from among a set of alternatives in light of a given object. Decision-making is not a disconnect function of management. In actuality, decision-making is entangled with the other functions, such as Planning, Coordinating, and Controlling. These functions all necessitate that decisions be made. For example, at the outset, management must make a critical decision as to which of numerous strategies would be followed. Such a decision is often called a strategic decision because of its long-term impact on the organization. Also, managers must make scores of lesser decisions, tactical and operational, all of which are significant to the organization's well-being. Cost accounting provides data for comparing performance against set targets. This response information is used to assess, correct, and therefore, control operations. Leadership and Communication: Decisions are at the heart of leader success, and at times there are critical moments when they can be difficult, perplexing, and nerve-racking. However, the boldest decisions are the safest. This source provides useful and...
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