Cost accounting is one type of accounting that is very important for trading companies because it relates to determining the cost of goods produced by a company to fulfill customer orders or fill stock inventory to be sold. Cost accounting is, of course, synonymous with costs, namely the sacrifice of economic resources measured by units of money or things that might occur to achieve certain goals. There are 4 cost elements associated with cost accounting, namely the sacrifice of economic resources, calculated in units of money, have occurred or will occur, and for certain purposes. In the meantime, if you want to hire a very convenient and reliable accounting service, we recommend you to hire the MYOB Bookkeeper Brisbane.
The Nature of the Cost Accounting Cycle
Before learning about the cost accounting cycle, you should know in advance about the notion of cost accounting. Cost accounting is the process of recording, classifying, summarizing, and reporting costs in ways that are in accordance with accounting principles.
The purpose of cost accounting is to provide cost information needed by the company to manage the company or a department within the company.
If all the elements are complete, an overview of the basics of cost accounting can be obtained. Recording activities in cost accounting include the following costs:
Use of standard costs in production.
Salary and wage costs.
Salary and wages for production.
Factory overhead usage.
Factory overhead costs incurred in production.
Transfer of factory overhead costs that are charged to the actual factory overhead costs.
Product in the final process.
Classification of costs includes the company’s main functions, cost behavior, behavior related to the product, responsibility, and its relationship to useful life. Classification of costs according to the company’s main functions consists of elements of the production function and non-production function.