Cost accounting can be defined as system of accounting by means of which costs of products and services of the company are determined. Here are some of the objectives of the cost accounting –
1. The main objective of cost accounting is to ascertain the costs of the products produced by the company so that can company can decide the price after adding margin to the cost of the product and hence cost accounting helps in deciding the price of the product that company should charge.
2. It also helps in improving the efficiency of the company by controlling the cost of the product through various cost control measures.
3. It also provides the base for decision making such as make or buy, whether to stop the production of the product if it’s in loss, or whether to continue with the existing plant and machineries or replacing them with new machineries which are more effective and efficient than them etc…..
4. It also helps in preparing the financial statements like profit and loss, balance sheet, funds flow statement, trial balance and other financial statements and hence it can be said to be the basis or foundation on which financial statements are prepared.
Hence from the above one can see that cost accounting is very important for any company when it comes to doing business and it should not be ignored.