What is cost accounting?

Cost accounting involves the techniques for:

1.

determining the costs of products, processes, projects, etc. in order to report the
correct amounts on the financial statements, and

2.

assisting management in making decisions and in the planning and control of an

organization.

For example, cost accounting is used to compute the unit cost of a manufacturer's products
in order to report the cost of inventory on its balance sheet and the cost of goods sold on its
income statement. This is achieved with techniques such as the allocation of manufacturing
overhead costs and through the use of process costing, operations costing, and job-order
costing systems.
Cost accounting assists management by providing analysis of cost behavior, cost-volumeprofit relationships, operational and capital budgeting, standard costing, variance analyses
for costs and revenues, transfer pricing, activity-based costing, and more.
Cost accounting had its roots in manufacturing businesses, but today it extends to service
businesses. For example, a bank will use cost accounting to determine the cost of
processing a customer's check and/or a deposit. This in turn may provide management with
guidance in the pricing of these services.
(http://www.accountingcoach.com/blog/what-is-cost-accounting)