Roles & Uses of Cost Accounting The purpose of this research is to

COST ACCOUNTING: DEFINITION, ROLES,

In the United States (US), cost accounting is a part of managerial accounting. Where financial accounting is concerned with recording actual financial transactions, managerial accounting is concerned with the discovery of relationships in financial data which enhance managerial decision-making (Garrison, 1986, p. 19).

One of the critical factors involved in cost accounting is the differentiation of costs into fixed and variable classifications (Anthony, and Reece, 1986, pp. 548-553). Fixed costs are those which must be borne by a firm, regardless of activity levels, while variable costs are those which fluctuate according to activity levels. Through the differentiation of costs into fixed and variable classifications, managers are able to construct break-even charts and other decision-making and control tools (Anthony, and Reece, 1986, pp. 561-565). Thus, cost accounting plays a major role in a firm's decision-making processes.

Production costs are also considered in the contexts of full costs, direct costs, indirect costs, job costs, process costs, standard costs, joint costs, and others (Anthony, and Reece, 1986, pp. 589-693). These costing concepts are all a part of the

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pposed to considering such changes as the changing situation may dictate. Again, such a failure detracts from the ultimate usefulness of the analysis of the variance between actual and standard costs. 3. Attempts to use a factor to adjust for changing conditions in the production environment, as opposed to the development of new standard costs. All too often, this type of approach may conceal that which is actually occurring. It may give credit for superior performance which is not deserved, or it may penalize participants where no such penalty is justified. 4. Attempts to use an "all-encompassing product standard," as opposed to the development of standard costs for each unique product (Calvasina, and Calvasina, 1984, pp. 50-51). For standard cost systems to be truly effective, it is essential to maintain "product integrity" in their development (Jordan, 1984, p. 39). 5. The inclusion of costs in standard costs which are not controllable at the production level (Barnes, 1983, p. 51). Although all costs associated with the production of a product must be included in standard costs, special considerations must be provided for the analysis of the variance between actual and projected costs, in the instances of costs which
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Some common words found in the essay are:
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Approximate Pages = 16 (250 words per page)