Q5. What is the importance of cost accounting?
Ans. Importance of cost accounting are as follows:
- Identifying unprofitable activities, and inefficiency and losses.
- Cost control though cost control and cost reduction technique.
- Locate exact causes for decrease or increase in profit/ loss.
- Provide information to top management for decision making.
- It is helps in price fixation.
- It variance analysis helps in dictate out the deviation of actual result for estimated figures.
- Costing provides information to government, wages tribunal and other bodies for various uses.
- It works out the cost of idle capacity so suitable action can be taken.
- It establishes more accurate cost per unit and cost structure.
- Help in preparation of more frequent and more accurate financial accounts.