What Are The Functions Of Cost Department?
What are the functions of Cost Department? The Cost Department is responsible for keeping records associated with the accounting for manufacturing and non-manufacturing activities. To attain the greatest usefulness, the cost department must not only record but also analyze all costs of manufacturing, marketing, and administration for use by management in planning and control.
In addition, as the functions of Cost Department, it issues significant control reports and other decision making data to executives, superintendents, department heads, and foremen which assist in controlling and in improving costs and operations. The need for the prompt issuance of reports and statements must alert the accountant to modern developments and techniques in the field of communications.
Information transmittal problems have too often been overlooked or neglected. Cost control needs or profit opportunities have been delayed or missed because of poor communications. The analysis of costs and the preparation of reports are greatly facilitated through proper sectioning of functions generally listed under the cost department.
Proper coordination is also needed with other functions closely allied with cost accounting for which separate departments or sections are often set up; namely, planning and cost analysis and general accounting activities. These functional units should come under the supervision of the controller.
The performance of the functions of the cost department involves the past, present, and future. In profit measurement, as evidenced in the income statement, the accountant is primarily concerned with the proper recording and presentation of costs and revenues for operations and transactions already experienced. When issuing cost control reports, he is working in the present rather than in the past. In developing costs for planning and decision-making purposes, the accountant is concerned with the future.
All related functions of Cost Department should be well executed by the costing team in order to attain faith of the Management