Objectives of Cost Accounting

 Cost accounting is the process of recording, classifying and summarizing costs incurred in a business. The main objectives of cost accounting are as follows:

1. To determine the cost of production: Cost accounting helps in determining the cost of each product or service, which is essential for pricing and decision making.
   
   
2. To control costs: Cost accounting helps in identifying areas where costs can be reduced, which helps in controlling costs and improving profitability.
   
   
3. To assist in decision making: Cost accounting provides relevant information to management for making informed decisions, such as deciding whether to discontinue a product line or expand operations.
   
   
4. To provide data for budgeting and forecasting: Cost accounting provides information for budgeting and forecasting future costs, which helps in planning and controlling operations.
   
   
5. To evaluate performance: Cost accounting provides information for evaluating performance and comparing actual results with budgeted or expected results.
   
   
6. To determine product profitability: Cost accounting helps in determining the profitability of each product, which is essential for pricing and product mix decisions.
   
   
7. To support financial reporting: Cost accounting provides information for financial reporting, such as cost of goods sold, which is used in preparing financial statements.
   
   

In conclusion, the objectives of cost accounting are to determine the cost of production, control costs, assist in decision making, provide data for budgeting and forecasting, evaluate performance, determine product profitability and support financial reporting.