The aim is to know the methods by which expenditure on materials, wages and overheads is recorded, classified and allocated so that the cost of products and services may be accurately ascertained; these costs may be related to sales and profitability may be determined. cost accountant constantly track and analyze the per-unit cost of the product. Forms and rulings are essential for a costing system but they must be revised and brought up-to-date in the light of altered conditions. It is argued that modern methods of costing are inapplicable to many types of industries. To reveal sources of economy by installing and implementing a system of cost control for materials, labour and overheads; 8. 5.
For example unit cost should not be charged with selling cost while it is still in factory. (a) So to do in the opinion of the Government under section 233 B of the Companies Act, 1956; (b) To ascertain correct cost of certain units when Government is approached for protection or financial help; (c) To ascertain correct cost of contract given to private firms under ‘cost plus’ basis; (d) Fix reasonable prices of certain items of production so as to prevent undue profiteering. If care is taken to devise a costing system to suit the requirements of the industry and avoid unnecessary elaboration, expenditure incurred in installing and operating the system will be a profitable investment and will bring adequate return. the value of material used, the amount of labour and other expenses incurred) so as to control and reduce its cost. When the cost records are to be audited, then properly maintained accounts and allocation will have a good effect in the mind of the auditor regarding the compliances made by the enterprise and to convince such auditors to issue a favorable report of accounts. Objectives of cost accounting are ascertainment of cost, fixation of selling price, proper recording and presentation of cost data to management for measuring efficiency and for cost control and cost reduction, ascertaining the profit of each activity, assisting management in decision making and determination of break-even point. Then by correctly analyzing all the costs to the respective products, one can quickly determine the per-unit cost of production for different types of products.Sometimes, the management wants to decide whether to produce the product inhouse or outsource the same. Objectives of Cost Accounting. Most of the literature until this time emphasized the procedures for the calculation of prime costs only.” 1.