Cost Accounting

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DEFINITION of 'Cost Accounting'

A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment. Cost accounting will first measure and record these costs individually, then compare input results to output or actual results to aid company management in measuring financial performance.

 

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BREAKING DOWN 'Cost Accounting'

While cost accounting is often used within a company to aid in decision making, financial accounting is what the outside investor community typically sees. Financial accounting is a different representation of costs and financial performance that includes a company's assets and liabilities. Cost accounting can be most beneficial as a tool for management in budgeting and in setting up cost control programs, which can improve net margins for the company in the future.

 

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RELATED FAQS
  1. How are fixed costs treated in cost accounting?

    Fixed costs are one of the two major inputs, along with variable costs, in cost accounting that are used by a company's management ... Read Full Answer >>
  2. What factors go into determining a business's shutdown point?

    Three main factors help determine a business' shutdown point: how much variable cost goes into producing a good or service, ... Read Full Answer >>
  3. How do some contra account types reduce book value?

    Typical examples of overhead in cost accounting include indirect labor, indirect materials, utilities and depreciation. A ... Read Full Answer >>
  4. What are the main objectives of cost accounting?

    Cost accounting is distinct and separate from general financial accounting, which is regulated by generally accepted accounting ... Read Full Answer >>
  5. What are the different types of costs in cost accounting?

    Cost accounting is an accounting process that measures and analyzes the costs associated with products, production and projects ... Read Full Answer >>
  6. How are members of the Cost Accounting Standards Board chosen?

    The Cost Accounting Standards Board, or CAS Board, is an independent board in the Office of Federal Procurement Policy. Five ... Read Full Answer >>
  7. How are fringe benefits calculated?

    Nearly all employers incur costs related to their employees beyond just their wages. Many of these costs are considered "fringe" ... Read Full Answer >>

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