Purchase Solution

cost accounting value to an organization

Not what you're looking for?

Ask Custom Question

1. Does cost accounting differ from financial accounting? If so, how? When is cost accounting valuable to an organization? Where is cost accounting information stored and maintained?

2. If cost accounting serves internal more than external purposes, do ethics matter not only in the development of the cost accounting system but also the uses of the output from the system?

3. With the multitude of cost classifications, how does an organization precisely identify which costs belong where? How does an organization determine how costs behave? Consider payroll costs?what really drives them? Are there different drivers for different employees?

Purchase this Solution
Solution Summary

Does cost accounting differ from financial accounting? If so, how? When is cost accounting valuable to an organization? Where is cost accounting information stored and maintained?

Solution Preview

Does cost accounting differ from financial accounting? If so, how? When is cost accounting valuable to an organization? Where is cost accounting information stored and maintained?

Yes, cost accounting, which is a kind of managerial accounting, is different from the financial accounting. The key difference between financial and managerial accounting is that financial accounting is aimed at providing information to parties outside the organization, whereas cost accounting information is aimed at helping managers within the organization make decisions.

source: http://www.investopedia.com/terms/f/financialaccounting.asp

Further, cost accounting provides top management with reports that are future-oriented, while Financial Accounting provides reports based on historical information.

source: http://en.wikipedia.org/wiki/Differences_between_managerial_accounting_and_financial_accounting

Accurate costing all the way down to the product, unit, service, or activity level is a prerequisite for effective decision making and efficient resource allocation. But in aggregate financial reporting, only the totality of expenses is needed to calculate net income and so accuracy at the product or activity level is irrelevant: After costs have been incurred, the totals remain the same however costs are allocated.

source: http://www.rand.org/pubs/monograph_reports/MR1261/MR1261.appb.pdf.

Further, the time span of financial accounting is quarterly and annually whereas cost accounting can be done when needed and is not for a predetermined fixed period.

Cost accounting is valuable to an organization if it significantly improves ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
Recent Feedback
  • "Thank you. "
  • "Thank you"
  • "Thank you. I got 20/20 last week for my discussion you help me out with."
  • "Thank you. Great Job. "
  • "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Motivation

This tests some key elements of major motivation theories.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

View More Free Quizzes
Related BrainMass Solutions

  • Preferred use of NPV over accounting rate of return

    The net present value (NPV) method offsets the present value of an investment's cash inflows against the present value of the cash outflows.

  • Lean Accounting and Waste

    Value stream accounting requires a value stream organization; often the organization has not changed when value stream accounting is introduced.

  • Limits of Not-For-Profit Organizations

    The non-profit has to determine the value an item to establish if the item will qualify as a fixed asset instead of an expense must be established prior to recording the fixed asset.

  • Discussing Activity-Based Costing

    Activity-Based Costing (ABC) is an accounting technique that allows an organization to determine the actual cost associated with each product and service produced by the organization without regards to the organizational structure.

  • Users of accounting information and value of the system

    Managerial Accounting is..."the process of identifying, measuring, analyzing, interpreting, and communicating information for the pursuit of an organization's goals. This is also known as "cost accounting."

  • Finance and Accounting: Value-Added Costs, Investment Ratios and Performance Evaluation

    This cost is based on value that is added for the customer. 2) Which of the following must occur before one can calculate the return on investment ratios for the subunits of an organization?

  • ACTIVITY BASED COSTING

    Costing (ABC) is an accounting technique that allows an organization to determine the actual cost associated with each product and service produced by the organization without regard to the organizational structure.

  • Fixed and Variable Costs

    This area of accounting helps in calculating and reporting of all the vital data related to accounting, for an Organization.

  • Activity-based responsibility accounting

    Change efforts lack connection to mission. c. Change efforts lack connection to strategy. d. Change efforts are driven by value-added analysis. 27. Which of the following is NOT an advantage of strategic-based responsibility accounting? a.

View More Related Solutions