The first question that we ask from Warehouse Management students is "Do you know your operating costs?" And our Production Planning Management students, "Do you know the cost of manufacturing one of your items?" After five years of training, I can count for a number of students to answer these questions and immediately tell me that their company does not use the cost accounting.
Students can not answer the question, only their company is in the so-called management and financial accounting site. At the heart of managerial accounting, historical and estimated data management needs are part of ongoing operations and long-term planning. The purpose of management accounting is to gather financial information to make economic decisions.
Financial Accounting focuses on the collection of financial statements that can be used to prepare financial statements that meet the needs of other external users of investors, creditors and financial institutions. information. The statements include the balance sheet, profit and loss account, retained earnings and cash flow statement. Although these financial statements are useful for management and external users, management needs additional reports, schedules, and analyzes during planning and controlling operations.
Management and Financial Accounting focus on the operations of the company to provide the necessary details to determine product costs and pricing. At best, they can only give you averages. In addition, cost accounting provides detailed cost information management needs for checking current operations and preparing a future plan. Management uses this information to decide how to allocate resources to the most effective and profitable areas of the business
. Cost accounting enables the management to correctly allocate costs such as raw materials, labor, and other factory resources to the products actually used by averaging them on each product. Without budget accounting, there are usually costs such as major investments in physical assets, labor improvement, depreciation, taxes, insurance, utilities, maintenance and repair of machinery, material handling, production adjustment, sales timing and the administrative costs added to the product as a header mark. The real cost of the product is never determined, which means that the company is loading too many products for certain products and not enough for others.
Cost accounting principles have been developed to enable manufacturers to process a variety of cost-related manufacturing costs with built-in control features. The information provided by the cost accounting system serves as a basis for determining the exact product costs and selling prices and helping the management plan and control operations.
Determining Product Costs and Pricing
to determine the cost of a product that will make it possible to produce meaningful financial statements and other reports for managing business. The cost accounting information system should be designed to allow for unit costs and total cost of ownership to be determined. Unit cost information is also useful for making important marketing decisions such as determining the sales price of the product, meeting the competition, negotiating bids and profitability. cost accounting is a report that can be used by the management to design and control operations. Planning is the definition of the company's objectives or goals and defines the tools that will be met. Efficient planning is facilitated by the clearly defined goal of the manufacturing operation and by a manufacturing plan that assists and manages the company in achieving the objectives
Cost accounting information promotes the planning process by providing the basis for future forecasts. Management can analyze data for estimating future costs and operating results and make decisions about purchasing additional facilities, changes in marketing strategies, and availability of capital.
Effective control is accomplished by creating a production plan by creating cost centers. Every leader should be aware of what is the responsibility of efficiency, operations, production and cost. A key element of proper control is the use of accountability and cost centers by systematically measuring and comparing the results and taking the necessary corrective measures
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