Is cost accounting necessary to properly manage a company?

Expert Solution

Answer-Cost accounting is an essential part of every business. It helps to provide better understanding of fixed and variable costs to a business.it is important for:-

1-Profit analysis – Cost accounting analyze each cost of the business and it helps to check which cost is contributing to the profit making aspect.

2-Better decision making – Cost accounting statements provide the information of previous year expenses so you can make financial decisions for the future based on that.

3-Cost control – Cost accounting allows businesses to control the cost of inventory, labour and other costs.

4-Identify the break-even point – Break-even points are used to measure total costs. The break-even point analysis process helps to analyze the total costs that are associated with business operations.

5-Reduce overhead costs – Overhead costs are the indirect costs that occurred by a company such as advertising, insurance, power and repair etc.

ekkarill92 answered 2 years ago

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