What is Cost accounting? It's a type of accounting that deals primarily with costing products and services. Costing a product or service involves determining what costs for material, labor, and burden go into it. It is also called management accounting or managerial accounting.
Cost accounting is different from general
ledger or financial accounting in that the reports and information that
the cost accountant produces is for management only. Very rarely, if
ever, is this information allowed outside a company. This information
is detail about the product or service a company makes, and the
competition should never know this.
Who works with cost accounting?
The Cost Accountant primarily, he or she usually is required to have a Bachelor's degree in Accounting. He will acquire specific knowledge about costing products or services and will also be involved in the financial analysis of information. The management of a company will use this information to improve processes and to quote new work.
What does the Cost Accountant do?
The cost accountant will maintain the costs for all parts in a MRP system. This system is a database for all the information for the business. The costs he will maintain are direct labor, indirect labor, material and burden costs.
He will also produce various reports for management which may include cost of goods sold, production and scrap reports, etc. These reports will help management run the business. In addition to these reports, many reports will be created based on the requirements of management. A very good understanding of Excel is necessary to create and analyze information.
The accountant will also develop burden rates for manufactured parts. Burden costs are usually the largest costs for a part, and the fair and reasonable allocation of burden is very important.
The cost accountant will also be involved in the creation of budgets and forecasts for the company. Since he is responsible for costs for the business, he is also responsible for forecasting these costs for the future.