What is Cost Accounting?
Cost accounting is the gathering of financial information into a meaningful format that will allow costs to be assigned to the benefiting function or cost objective. What are benefiting functions and cost objectives? Benefiting functions are the end result of all University financial information grouped into functions. The University’s primary function is education/instruction. Secondary functions include Organized Research (OR) that may or may not involve sponsors, Other Sponsored Activities (OSA), including clinical trials, conferences, sponsored training, and sponsored public services, and, Other Institutional Activities (OIA) including sports, student and non-student residences, cafeteria, bus services, etc. Cost objectives may be considered a sub-set of benefiting functions. This is the final point at which costs are accumulated and indirect costs (officially known as Facilities and Administrative or F&A) are allocated. The cost accountant generally deals with this level of cost a
Cost accounting is an approach to evaluating the overall costs that are associated with conducting business. Generally based on standard accounting practices, cost accounting is one of the tools that managers utilize to determine what type and how much expenses is involved with maintaining the current business model. At the same time, the principles of cost accounting can also be utilized to project changes to these costs in the event that specific changes are implemented. When it comes to measuring how wisely company resources are being utilized, cost accounting helps to provide the data relevant to the current situation. By identifying production costs and further defining the cost of production by three or more successive business cycles, it is possible to note any trends that indicate a rise in production costs without any appreciable changes or increase in production of goods and services. By using this approach, it is possible to identify the reason for the change, and take steps
