Cost accounting is the branch of accounting where the cost is analyzed to distribute the cost associated with the services, product, and process. After calculating the total cost, and profit the cost of the final product in the market is decided. The cost engaged in the business is from three components like material, labor, and other expenses.

Objectives of cost management

Techniques of cost management

Activity-based costing, quality management, JIT inventory management, target costing, and balanced scorecard are the different methods used to control the cost. Let me look at these cost management techniques in detail.

The cost reconciliation statement reveals the accuracy in the financial statements. Controlling the cost with the budget leads to the prediction of future expenses. Cost management is very crucial in the acquisition of the business. The traditional method of cost management is not customer-centric, and it is said as financial aspects oriented one. In a business environment, dynamic forces create competition. And to manage competition from rivals, it is essential to know the price which customers prefer to buy. Financial performance shows the perspective of the shareholder. Cost management is to manage the expectation of the buyer. Thus, cost accounting acts as a guide to the future policies of the business.

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