The Meaning of Cost Accounting Essay

Which means of Expense Accounting

Previously, cost accounting used to be a technique for the ascertainment of costs of products or perhaps services based on historical data. In time, as a result of competitive character of the market, it was realized that ascertaining of cost is not so as important as controlling costs. Price accounting started to be considered even more as a technique for cost control as compared to expense ascertainment. Due to the technological improvements in all fields, cost decrease has also arrive within the walk of expense accounting. Cost accounting is, thus, focused on recording, classifying and outlining costs for determination of costs of products or services, planning, controlling and minimizing such costs and redecorating of information to management pertaining to decision making. Concept of Cost

Cost accounting is concerned with cost and thus is necessary to comprehend the meaning of term expense in a proper perspective. On the whole, cost means the amount of expenses (actual or perhaps notional) received on, or perhaps attributable to a given thing. Nevertheless , the term expense cannot be exactly defined. Its interpretation depends on the following elements: •The characteristics of organization or sector

•The context in which it is utilized

1 . Fixed, Variable and Semi-Variable Costs

The cost which usually varies immediately in proportion with every increase or perhaps decrease in the quantity of output or development is known as variable cost. A number of its illustrations are the following: •Wages of laborers

•Cost of direct material


The price which would not vary nevertheless remains constant within a provided period of time and a range of activity in spite of the changes in creation is known as fixed cost. Several of its examples are the following: •Rent or perhaps rates

•Insurance costs

•Management salary

The cost which does not differ proportionately although simultaneously does not remain fixed at all times is recognized as semi-variable expense. It can also be named as semi-fixed cost. A number of its...

Sources: Horngren, C. T., Srikant, Datar M., & Engender, G. (2007). Cost Accounting: A Bureaucratic Emphasis. Globusz Publishing.