NOTES OF COAST ACCOUNTING

1.2. Roles of cost accounting in management

ROLE OF COST ACCOUNTING IN MANAGEMENT 
Fast forward:
Cost accounting is useful and applicable in business organizations and its environment in many 
ways.
Cost accounting is utilized for a number of purposes, some of which are briefly described 
in the following points:
a) Accounting for costs
This may be seen as a record keeping or score-keeping role. Information must be 
gathered and analyzed in a manner which will help in planning, controlling and decision 
making
b) Planning and budgeting
This involves the quantification of plans for future operations of the enterprise; such 
plans may be for the long or short term, for the enterprise as a whole or for the individual 
aspects of the enterprise.
c) Control of operations of the enterprise
Control may be assisted by the comparison of actual cost information with that included 
in the plan. Any differences between planned and actual events can be investigated 
and corrective action implemented as appropriate
NATURE AND PURPOSE OF COST ACCOUNTING
Download more free notes at www.kasnebnotes.co.ke
8 COST ACCOUNTING
STUDY TEXT
d) Decision making
Cost accounting information assists in the making of decisions about future operations 
of the enterprise; such decisions making may be assisted by the information from cost 
techniques and cost-volume-profit analysis.
e) Resource allocation decisions
For example product pricing in determining whether to accept or reject jobs. This is 
based on cost and revenue implications of the relevant decisions
f) Performance evaluation
Cost accounting information is used to measure and evaluate actual performance so as 
to make a decision of the degree of optimality or efficiency of resource utilization.