Scope of Cost Accounting Collection and Analysis of Expenses

The scope of cost accounting is very wide. It deals with the collection and analysis of expenses, the measurement of the production of the different products at the different stages of manufacturing and linking up production with the expenses. In fact, the varying procedures for the collection of expenses give rise to the different systems of costing as Historical or Actual costs, Estimated costs, standard cost, etc. again the varying procedures for the measurement of production have resulted in different methods of costing such as specific order costing, operation costing, etc. for linking up of production with the expenses the different techniques of costing such as marginal cost technique, the total cost technique, direct cost techniques, etc. have been evolved. All the three i.e. systems, methods and techniques can be used in one concern simultaneously. Cost accounting is the process for the cost which begins with the recording of expenditure and ends with the preparation of statistical data. It is a formal mechanism by means of which the costs of products or services are ascertained and controlled. The cost can be predetermined either by standard costing or estimated costing. If the cost and financial accounts are kept separately then their reconciliation is also to be done in order to verify the accuracy of both sets accounts.

In cost accounting cost control it gives the guidance and regulations by executives action of the costs of operating an undertaking. It aims at guiding the actual towards the line of targets; regulates the actuals if they deviate or vary from targets; this guidance and regulation are done by executive action. The cost can be controlled by standard costing, budgetary control, proper presentation and reporting of cost data and cost audit.