COST &
MANAGEMENT
ACCOUNTING:
MBA:
(Finance)
COST CLASSIFICATION AND COST
BEHAVIOR:
Cost Accounting:
Cost Accounting is an expanded phase of financial accounting which
provides management promptly with the cost of producing and/or
selling each product and rendering a particular service.
Management Accounting:
Management accounting is application of professional knowledge and
skill in the preparation and presentation of financial information in such
, a way as to assist management in decision making and in the planning
and control of operations of the entity.
Objectives:
Objective of cost accounting is computation of cost per unit, whereas
the objective of management accounting is to provide information to
the management for decision making purposes.
Users of Cost Accounting:
Users of cost & management accounting are the decision makers and
the managers of the entity/organization for which all this exercise is
undertaken.
Uses of Cost and Management Accounting:
1. It determines total cost of production and cost of sales.
2. It determines appropriate selling price.
3. It discloses the profitable products, areas and activity/capacity levels
4. It is used to decide whether to manufacture or purchase from
outside.
5. It helps in planning and controlling the cost of production.
Elements of Cost:
Any product that is manufactured is the result of consumption of some
resources. The management, for its planning and controlling functions,
must know the cost of using these resources. The constituent elements
of cost are broadly classified into three distinct elements:
1 Direct Material Cost.
2 Direct Labor Cost.
MANAGEMENT
ACCOUNTING:
MBA:
(Finance)
COST CLASSIFICATION AND COST
BEHAVIOR:
Cost Accounting:
Cost Accounting is an expanded phase of financial accounting which
provides management promptly with the cost of producing and/or
selling each product and rendering a particular service.
Management Accounting:
Management accounting is application of professional knowledge and
skill in the preparation and presentation of financial information in such
, a way as to assist management in decision making and in the planning
and control of operations of the entity.
Objectives:
Objective of cost accounting is computation of cost per unit, whereas
the objective of management accounting is to provide information to
the management for decision making purposes.
Users of Cost Accounting:
Users of cost & management accounting are the decision makers and
the managers of the entity/organization for which all this exercise is
undertaken.
Uses of Cost and Management Accounting:
1. It determines total cost of production and cost of sales.
2. It determines appropriate selling price.
3. It discloses the profitable products, areas and activity/capacity levels
4. It is used to decide whether to manufacture or purchase from
outside.
5. It helps in planning and controlling the cost of production.
Elements of Cost:
Any product that is manufactured is the result of consumption of some
resources. The management, for its planning and controlling functions,
must know the cost of using these resources. The constituent elements
of cost are broadly classified into three distinct elements:
1 Direct Material Cost.
2 Direct Labor Cost.
