The most complete understanding and function of cost accounting

Nafa Lightyani

The most complete understanding and function of cost accounting – Hi, let's get to know the meaning and function of cost accounting together, so that you get complete information, you should read the article that we have provided below.

Information systems, budget calculations, and reporting are closely related to a company's long-term survival and growth.

The ability of business actors to understand the basics of cost accounting, from definition to application, is very important for the smooth running of a company.

This cost accounting is necessary for the company's internal (management) and external (investors or creditors) responsibilities.

Cost accounting is very important for every company, because the historical data provided in its records will be very important for management to use in formulating future choices or policies.

What is Cost Accounting

In understanding accountancy costs as an activity where all transactions or costs are recorded, classified, produced and reported, from the production process through the distribution or sale of goods or services. Cost accounting functions as an information tool for all company expenses.

When company management needs more information about this accounting to make judgments, that's where it comes in.

Apart from that, accounting is also an instrument of company accountability to interested parties.

Understanding Cost Accounting According to Experts

It is very important for you to understand the idea of cost accounting before reading any further. To make things easier, below is an explanation of cost accounting according to various experts that might be reviewed.

1. Rayburn

Rayburn defines cost accounting as “all operations aimed at identifying, measuring, evaluating, and reporting a company's budget.” Both have a direct impact on a company's production, distribution, and manufacturing processes.

2. Bastian and Nurlela

Cost accounting, according to Bastian and Nurlela, is a scientific field that focuses on ways of documenting, measuring and reporting budget information used in the process. principal production a company.

3. Flat, Foster and Horngren

Datar, Foster, and Horngren describe cost accounting as a field of science that focuses on how to provide the required budget information and its use by consumers finance and company management.

4. Kholmi and Yuningsih

Cost accounting, according to Kholmi and Yuningsih, is a set of procedures that includes monitoring, documenting, assigning and reporting information about various types of company production budgets after audit.

5. Mulyadi

According to Mulyadi, cost accounting is a system for capturing, combining, summarizing, presenting and analyzing data on production and sales costs of goods and services.

6. Schaum

Cost accounting, as defined by Schaum, is a process that consists of documenting and reporting the results of budget measurements for goods and services. A number of tasks are completed to find out what people need and how much money they have.

7. Abdul Halim

The definition of cost accounting according to Abdul Halim is a field of science that focuses on assessing the cost of products produced (costs) to fulfill orders or as merchandise inventory.

8. Carter and Usry

Cost accounting, according to Carter and Usry, is a branch of economics that focuses on assessing costs to plan, organize, improve quality, increase efficiency, and make better decisions.

9. RA Supriyono

According to RA Supriyono, the idea of cost accounting is a branch of recording science that is used as a management tool to monitor and reduce cost transactions and provide information in the form of budget reports.

10. Armanto Witjaksono

According to Armanto Witjaksono, the concept of cost accounting is described as part of management operations in the form of documenting and assessing processes using tools. This discipline centers on the concepts of organization and coordination.

11. Hendi Somantri

As defined by Hendi Somantri, the process of documenting, categorizing, summarizing, and presenting financial statistics related to the production and sales transaction budget of goods is what constitutes cost accounting in his eyes and in the eyes of others.

12. Wikipedia

The definition of cost accounting according to Wikipedia is a part of information systems science that is focused on the process of monitoring, documenting and assessing all costs in the form of manufacturing costs for a product.

Cost Accounting Function

Did you know that cost accounting has a vital position and function in the company's reporting system?
To expand your knowledge and understanding of this topic, read the entire review below:

1. Determine the Cost or Cost of Goods

One of the roles of cost accounting is to help identify the costs or cost of products and services, both produced and sold by the company.

The procedure in question consists of capturing, categorizing, monitoring and summarizing all components of production costs based on historical data.

Aiming for medium costs for items is essential to ensure that customers are not put off by the price. To determine the cost of an item, you must first understand the total costs incurred during the manufacturing process. The cost of a product or service can be determined in this way.

2. Detail the cost of goods or costs

Not only does it help calculate costs, with cost accounting, the costs of an item can be documented in depth from every aspect of its production. This is done to anticipate errors.

Through cost accounting, record keeping cost of goods sold items are carried out in detail. Starting from the smallest items to the largest, according to the basics of production. Costs can be divided into two categories: general and specific.

If the expenses and costs of the items included in the budget report can be calculated accurately and precisely, then the report can be prepared. After that, it is possible to determine whether the product price is accurate or not.

3. For data on the budget preparation process

Apart from describing the cost of goods, cost accounting can also be used as a tool for the production budget planning process. Additionally, the recorded data can be used to create basic materials.

The recording procedure will not be able to be completed completely and in depth without these basic facts, and this will inevitably result in limitations in budget preparation.

Therefore, it is important for the implementing party to explain the items that must be provided, complete with all costs.

Budget money for production can be used if there are specifics about what must be obtained so that the product manufacturing process runs smoothly and sustainably. For example, if prices are not included in the report, the data is considered incomplete.

4. Basic Information on Cost and Expense Planning

Another purpose of cost accounting is to provide basic data for budgeting and costing tasks. Of course it can't be done carelessly. The author must first know the types of expenses and their distribution.

Creating a strategy requires logical justification supported by evidence. The aim is that when implementation or activities meet expectations, the findings from cost accounting records are used as a basis for argumentation.

The company's cost planning process will be simplified if all necessary data is documented accurately and in-depth in the accounting system. Additionally, the weight of the load can be calculated using this information.

5. Budget Planning and Control

The next task is to use cost accounting as a basis for budgeting and monitoring. Management can use cost accounting to investigate and, if necessary, verify the sources of budget report variances or inconsistencies.

Discrepancies in production budget reports may alert management to possible intentional deviations and help the company avoid financial losses in the long run.

Types of Cost Accounting

Not only does it have a role, cost accounting also consists of various categories that are important to know and understand, namely as follows:

1. Activity Based Accounting

Activity-based cost accounting is one approach to cost accounting. The aim of the effort in this case is to measure the quantity of the production budget and production costs. With this task, we will ensure both reports are in sync.

According to what has just been said, activity-based accounting is used to track things such as expenses and operating costs that are part of the production process. The main goal is to find out the amount of profit from the item.

2. Standard Cost Accounting

Standard cost accounting is a form of cost accounting that focuses on analyzing the efficiency of human resources (HR), production equipment, and the company's production raw material needs.

Cost accounting in its application takes the form of a series of actions that record all the company's budget needs, especially those directly related to production. As the name suggests,

3. Contribution Margin

Contribution margin is the next cost accounting method. Break-even analysis is at the core of the work of this field. These actions reveal which product features could potentially help the company.

This contribution margin is used to record the company's income from certain items, which are actually utilized. The report findings can be used by management to determine whether production should be increased or reduced.

4. Cost Volume Profit

Profit The final form of cost accounting is cost volume profit. From the name it can be seen that this course focuses on recording procedures for determining the size of the production budget and aligning it with product volume.

In this recording procedure, the company uses the main concept that the quantity of cost of production is not experienced by the company but the volume of product that will be changed. The main goal is to identify potential avenues for generating additional income.


Cost accounting is an area of economics that focuses on assessing costs to plan, organize, improve quality, increase efficiency, and make better decisions.

Cost accounting is very important for every company, because the historical data provided in its records will be very important for management to use in formulating future choices or policies.

This is the most complete information about the meaning and function of cost accounting, hopefully the article above can be useful and helpful to all of you.

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Nafa Lightyani

I am a content writer for SEO, Technology, Finance, Travel, Cooking and others, with accurate discussions.