Importance of Cost Accounting.

Q5. What is the importance of cost accounting?
Ans. Importance of cost accounting are as follows:

  1.  Identifying unprofitable activities, and inefficiency and losses.
  2.  Cost control though cost control and cost reduction technique.
  3.  Locate exact causes for decrease or increase in profit/ loss.
  4.  Provide information to top management for decision making.
  5. It is helps in price fixation.
  6. It variance analysis helps in dictate out the deviation of actual result for estimated figures.
  7. Costing provides information to government, wages tribunal and other bodies for various uses.
  8. It works out the cost of idle capacity so suitable action can be taken.
  9. It establishes more accurate cost per unit and cost structure.
  10. Help in preparation of more frequent and more accurate financial accounts.

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