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Cost Accounting Reports Play a Very Important Role in Decision Making

Cost accounting is a part of the management accounting and plays a very crucial part in the organization’s entire functions and operations. It is really important that the organizations invest judiciously as well as sagaciously in the cost accounting reports that are prepared by the cost accountants. Since the cost accountancy is a part of the management accountancy, therefore it does not have to adhere to the guidelines of any of the accounting bodies. The cost accounting reports are solely meant for the internal managers in order to take decisions that would be beneficial for the organization.

The actual purpose of the cost accounting reports is to establish budgets and to determine the actual costs of the operations that the company indulges in. It is really important that the management has a clear idea of how much money they are investing in the various functions as well as the operations of the company and how much profit they are making. In fact the cost accounting reports also enable the management to fix the costs of the products or the services that they are offering by determining the actual costs that have been incurred by the company in order to produce those products.

Some of the methods of preparing the cost accounting reports are:

  • Lean accounting method
  • Activity based costing
  • Standardized or standard cost accounting
  • Throughput accounting
  • Activity based costing
  • Marginal costing
The cost accounting reports enables the management to determine the processes that are profit making as well as the processes that are proving to be at a loss. Hence the cost accounting reports make sure that the company is always in a profit mode and is not investing heavily on the processes and the procedures that are not at all bringing any profits to the company.