• Saturday September 19,2020

Cost accounting

We explain what cost accounting is and what it should take into account. In addition, why cost accounting is so important.

When performing cost accounting, administrative and managerial work is evaluated.
  1. What is cost accounting?

Cost accounting offers us real and concrete information on all the costs and expenses that a company has to produce. Establishing the cost of a product serves to have control over the production, the sale of the product, administration and financing thereof.

The cost is the value paid for obtaining goods or services . The cost causes a reduction in assets. The costs of a company are related to the activities carried out daily.

When performing cost accounting, administrative and managerial work is evaluated . It is always necessary to compare the income of the company and the costs that have been previously projected.

In addition: What is accounting?

  1. What should cost accounting take into account?

The cost is the monetary value of the raw material and labor.

A company needs to consider certain aspects when accounting for costs . First of all, the product and its elements, the volume and production, the tasks performed, the period of time, etc.

As for the products, the materials or resources used in their production must be taken into account, directly and indirectly, labor (ie the effort of employees, both physical and mental) and manufacturing costs.

With regard to the activities carried out around the elaboration of a product , manufacturing is taken into account, that is, production, the market (promotion and sale of the product), administrative costs (salaries, etc.) and financial costs.

For example, if a product has a cost of materials of a certain value, to that must be added the salary of the employees who produce them, which is spent on distribution and advertising, taxes, and so on.

You have to differentiate what the costs are from the expenses. The cost is the monetary value of the raw material and labor . Expenditure corresponds to the time of production, distribution and administration of the company, such as the payment of wages.

  1. Why is cost accounting important?

Knowing in detail the production costs allow greater control of operations. Cost accounting offers the company all the information it needs to make timely and correct decisions based on real and concrete information.

This information is useful for developing new projects and evaluating the activities carried out within the company. As we said at the beginning of this article, knowing the cost of a product helps us to have control over the production, sale of the product, administration and financing of the product.

Accounting always aims to provide useful data to the managers of a company or entity to be able to make decisions correctly in the economic area. The data provided is recorded in accounting documents that show the economic situation of the company in question. In general, cost accounting seeks short-term objectives for the company to obtain benefits and not losses.

In addition, the company will know exactly how much to sell the product in accordance with its total expenses, which exceeds the raw material, since labor and management are taken into account. The company thus finds a state of equilibrium between income and costs, and in this way it can make decisions, which is ultimately the primary objective of a company.

Interesting Articles

Bullying

Bullying

We explain what bullying is and how it manifests itself in society. History of his study. What are the different types of bullying. «13 Reasons Why», a television series dealing with school bullying. What is bullying? Bullying or bullying refers to psychological, physical or verbal abuse, suffered by children and young people who are cruelly mistreated by another or other children, with the aim of intimidating, scare him, harm him, and let the stalker gain some advantage from bullying.

Meridians and Parallels

Meridians and Parallels

We explain what the meridians and parallels are, the characteristics of each one and how they are used. In addition, geographical coordinates. The meridians and parallels segment the globe vertically and horizontally. What are meridians and parallels? Meridians and parallels are two types of imaginary lines with which the world is usually organized geographically

Measures of weight

Measures of weight

We explain what the weight measurements are and what they are for. In addition, other less common weight measures. Weight measurements are used to calculate the amount of matter in a body. What are the measures of weight? Weight units are called the units conventionally used to calculate the weight of a body , that is, the amount of matter in it

Pulley

Pulley

We explain what a pulley is and what is the history of this machine. In addition, the types of pulleys that exist and the parts that compose it. A pulley transmits force and acts as a traction mechanism. What is a pulley? It is known as a `` pulley '' to a simple machine designed to transmit force and operate as a traction mechanism , reducing the amount of force needed to move or suspend a weight in the air It consists of a wheel that turns on a central axis, and provided with a channel on its periphery through which a rope passes

House Rules

House Rules

We explain to you what the rules of coexistence are and their characteristics. In addition, the rules in the classroom, at home and in the community. The rules of coexistence depend on place and culture. What are the rules of coexistence? The rules of coexistence are guidelines of protocol, respect and organization that govern space, time, goods and traffic between people They share a specific place and time

Adaptation of living beings

Adaptation of living beings

We explain to you what the adaptation of living beings is and what types of adaptation exist. Some examples of adaptations. The cactus spines are a clear example of adaptation. What is the adaptation of living beings? In biology, we mean by adaptation of living beings or biological adaptation to the process in which the latter develop the ability to survive in a different environment , varying their strategies and even its physical characteristics, in order to preserve life