Main benefits or advantages of maintaining cost accounting are listed below:
1. Facilitates Price Fixation
Cost accounting helps to fix optimum level of selling price of the products and services by providing information about cost of production and other related costs. It also guides to set quotation.
2. Facilitates Wastage Control
Cost accounting system helps to monitor wastage of raw materials, labor and other resources by maintaining proper record of materials and supplies. It assists the management to control wastage.
3. Cost Control
Cost accounting helps to control several costs such as production expenses, job costs, administrative expenses, process costs, departmental costs etc. by using advance costing techniques modern methods of production.
4. Assures Optimum Efficiency
Cost accounting assures optimum efficiency with the help of different methods like standard costing and budgetary control.
5. Locating Cause
Cost accounting helps to find out the causes of losses or weakness of the business. It help the management to take appropriate action to improve the profitability.
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6. Assists Decision Making
Cost accounting is very useful in the decision making process of the management. It provides information regarding cost, labor, materials, operation process, inventory level etc. to the management. So, the top level management can make proper decision and future planning with the help of cost accounting.
Cost accounting maintains proper inventory system in the organization. It keeps up-to-date record of materials and supplies. It helps to maintain optimum level of inventory.
8. Checking Financial Accounting
Cost accounting is also used to check and analyze the results obtained from financial accounting.
9. Suitable For Large Business
Cost accounting is scientific and systematic method of recording cost related data.So,it is suitable for large business firms with large number of production and modern technology.
