What is the scope of Cost Accounting? Cost accounting is generally considered and discussed as being applicable only to manufacturing operations. This is not the case; every type and kind of activity, regardless of size, in which monetary value is involved should consider the use of cost accounting concepts and techniques.
The Scope Of Cost Accounting is multi-fold. Non-manufacturing activities of manufacturing firms, wholesale and retail businesses, banks and other financial enterprises, insurance companies, transportation companies, railroads, airlines, shipping companies, bus companies, schools, colleges and universities, hospitals, governmental units on local, state, or federal levels, churches, and welfare organizations all should employ cost accounting in order to operate efficiently.
These many types are not considered individually in this text; however, at appropriate places mention will be made regarding the use of specific costing concepts and techniques in certain of these activities. In other cases it is a matter of recognition by the management and its accounting staff of the applicability of these concepts and techniques to their own special non manufacturing and nonprofit fields of endeavor.
Scope of Cost Accounting
More specifically, cost accounting is charged with the tasks of:
1. Aiding and participating in the creation and execution of plans and budgets.
2. Providing management with information in connection with problems that involve choice from among two or more alternative courses.
3. Establishing methods and procedures that permit control and, if possible, reduction or improvement of costs.
4. Creating inventory values for costing and pricing purposes and, at times, controlling physical quantities.
5. Determining costs and profit for an accounting period.
6. Cost ascertainment and Cost Control and to adopt best choice to correctly ascertain the cost of products or services; controlling cost with respect to given budgets and to analyze reasons for deviations and taking remedial measures to the deviations during an accounting period.