Cost Accounting Definition and Purpose

Cost accounting is defined by the Institute of Management Accountants as 'a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, allocating, aggregating and reporting such costs and comparing them with standard costs.'

The end goal of cost accounting is to advise the management on how to optimize business practices and processes based on cost efficiency and capability.

Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future.

<p>Cost accounting information is also commonly used in financial accounting, but its primary function is for use by managers to facilitate their decision-making.</p> Signup and view all the answers

<p>Modern cost accounting originated during the industrial revolution when the complexities of running large scale businesses led to the development of systems for recording and tracking costs to help business owners and managers make decisions.</p> Signup and view all the answers