Management is concerned with the maximization of

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Management is concerned with the maximization of wealth through Minimization of cost Maximization of profit For this purpose information provided by cost accounting is analyzed by the management for decision making and management control function.
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MANAGEMENT ACCOUNTING Reports generated through management accounting are used internally. Major function of management accounting: Planning & Forecasting Controlling Decision making Pricing Make or Buy Shut down or Continue operation Equipment Replacement
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PURPOSE OF COST ACCOUNTING Provides information relating to cost of production. Determines the appropriate selling price. Discloses profitable products, areas and activity level. Helps in make or buy decision. Budgeting relating to production function. Controls production variances. Provides information to financial accountant.
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CLASSIFICATION OF COST Cost Classification Direct Cost Indirect Cost Direct Material Direct Labor Factory Overhead Other Direct Expenses
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DIRECT COST Cost that can be traced in full to the product or services is direct cost
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TYPES OF DIRECT COST Direct material costs are those cost of material that are traceable in full in the cost of a product or services Direct labor cost is specific cost of the worker in producing a product or service For example wood in manufacturing of table For example labor involved in cutting wood
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