Benefits of Cost Accounting Information

personify chronicle offers benefits for manufacturing companies. A cost history information system offers benefits for many companies. Cost accounting is a type of accounting method concerned with the cost of goods manufactured and /or sold. Many factors argon taken into consideration when cost accountants go business be . The information acquired by these accountants is used for inventory valuation , financial statements and decision making .Inventory Valuation Cost accounting offers the benefit of having an accurate inventory valuation of all inventories on hand . This includes all raw products used to make goods , all work-in -process inventories and all stainless goods ready for sale. Cost accountants take all costs into consideration and are able to determine the value of all of these inventories on hand . This information is profitable for financial statements and for management of the company . Managers use this information to determine selling goals and production nee ds .Maximum Efficiency Cost accounting is beneficial to determine the maximum efficiency production amounts . Cost accountants take all costs into consideration when calculating this amount . Manufacturing costs consist of direct labor , materials and manufacturing overhead. These costs are all calculated and added up to find a per- unit cost price for manufactured items. When the cost price is calculated, these accountants begin determining a hypothesis of production rates .Many times cost accountants determine that if production is increased slightly, overhead costs remain the same. If this is the case, increasing production in truth results in a lower per -unit cost for production , and the end result is a higher profit . Decision Making The information determined by cost accountants is used for decision making for future company needs . Short -term goals and decisions are made as well as long-term strategic decisions. The analysis of cost information is used to compare projected costs to actual costs .This is useful for businesses when budgets are created . Often times, unforeseen costs follow with production , and they are determined in this way. Unforeseen costs are added into the future budgets at rates calculated by cost accountants . Cost accounting also helps companies establish approximate future cash flows . Short -term production goals and marketing decisions are set based on this information. Long -term production plans are also calculated.