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What is cost accounting system and what are the benefits of cost accounting system?

Cost Accounting System=

Cost accounting system is that type of accounting system which is used to calculate costs of various items and the costs related to the items manufactured in the business, its main purpose is to provide information to decision makers for making different type of decisions for managing and growing business in order to make business successful.


Uses and Benefits=

  • It is used to calculate and define manufacturing costs of various items.
  • It is also used to explain the process about which costs will better serve the customers.
  • The cost accounting system helps to observe the effectiveness of all the operations of the business.
  • It helps to plans the functions of the activities.
  • Controlling different functions related to various activities of the business is easy by using cost accounting system.
  • Same as many other uses and benefits this system can evaluate employee performances.
  • Through this system we can reward the deserving employees.
  • This system is also helpful in disclosing inventories.
  • Cost of goods sold can be calculated via this system to monitor the profit ratios.
  • Different expenses which is related with the products and the services can be easily detected with the help of cost accounting system

Example:

Basic procedures of cost accounting are following:
Job order costing and Process costing



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