The cost of a product cannot be perfect and it may vary for the same product depending upon different constraints and situations of production and market.Some costs are actual, such as raw material cost, freight cost, labor cost, etc. Financial accounting is developed to communicate economic information of an organization as a whole. Accounting is a broad concept. Cost accounting is one of the branches of accounting. The objective of cost accounting is to deal with the cost of products or services as the name implies. Concepts of Cost Accounting Cost. Financial accounting is developed to communicate economic information of an organization as a whole. It is in the nature of humans to seek benefit in every activity they pursue. These expenses are called urgent cost. They add to the cost of product or services without any value addition to it.Cost center refers to a particular area of activity and there may be multiple cost centers in an organization. (b) Cost accounting is a science and arts both. Some costs are actual, such as raw material cost, freight cost, labor cost, etc. The subject has been developed to mitigate the limitation financial accounting originally had. Cost accounting is effective in inventory control using various techniques. Value addition of the product may be due to some process on product or to make the product available or there may be other reasons; but it also includes the profit share on it.There are some expenses that are to be incurred on an immediate basis. While assessing the profitability of a proposed alternative, incremental revenues are compared with incremental costs.Added value means value addition to any product. The importance of cost accounting is explained below:Cost accounting applies different methods of costing for calculating job costing, process costing etc. To earn revenue, some expenses are incurred like rent, salary, insurance, selling & distribution cost, etc. There are three types of cost centers:Profit centers are inclusive of cost centers as well as revenue activities. And, cost accounting helps accountants to determine the selling price.Total cost and total revenue of every product or services is helpful for determining profit or loss. The data can be derived by comparing cost price and market price.Cost accounting offers vast advantages to a firm. There is a cost involved to purchase or produce anything. And, Cost accounting describes the formal system involving accounting. Some expenses are attributable to cost. Some of these costs are of capital nature and some of these are called deferred revenue expenditure.Research costs are incurred to discover a new product or to improve an existing product, method, or process.The costs incurred on teaching, training, apprentice of staff or worker inside or outside the business premise to improve their skills is called training cost. Systematic classification and analysis of accountants can be achieved with application of accounting branches. Costs may be different for the same product, depending upon the stages of completion. It is because the costing system may be specially designed to meet the need of a specific industry.Lack of uniform procedure: Twwo equally competent cost accounts may arrive at different result from the same information.Fiscal transaction requires proper recording. The cost changes according to the stage a product is in, for example, raw material, work in progress, finished goods, etc. However, the following are its most important objectives:The cost of a product or services or jobs has to be determined for budget allocation. Profit centers adopt policies to achieve such targets. Buy Introduction to Cost Accounting, International Edition 1st by MOWEN/HANSEN (ISBN: 9780538749633) from Amazon's Book Store. What does it do? Expired cost relates to current cost. Some expenses are... Loss. It is called out of stock cost.Contribution margin is the difference between sale price and variable cost.Ordering costs represent the cost to place an order, up to to stage until the material is included as inventory.To develop new product, improve existing product, and improved method in producing a product called development cost.The cost incurred to implement a new policy in addition to regular policy is called policy cost.If available facilities remain idle and some loss incurred due to it, it is called idle facilities cost. The techniques involve ABC analysis, economic order quantity, stock level etc.Cost accounting in measurement of competence of operations through organization if standards and diverse analysis.It helps in preparation of various budgets such as sales budget, production budget, material purchase budget, flexible budget etc. And, the subject provides information for various managerial decisions, such as,The detailed information related to the cost of a product or service is to be determined. So, what’s cost accounting? Every cost center adds some cost to the product and every cost center is responsible for all its activity and cost. Suppose the expenses incurred in an accounting period do not have any future value, then it is called an expired cost.Incremental revenue implies the difference in revenues between two alternatives. Everyday low prices and free delivery on eligible orders. The three major branches of accounting are Financial Accounting, cost accounting and management accounting. The reporting of financial accounting has its limitation when it comes to internal reporting i.e for the formulation of policy and strategy, decision making and control.