NEED / IMPORTANCE / ADVANTAGES OF COST ACCOUNTING:
(1) Determination of total cost: Cost accounting helps to account for all the costs
incurred in manufacturing a product or providing a service.
(2) To Fix Selling Price: Cost accounting helps to fix the selling price for a product /
service after considering a reasonable profit margin.
(3) Cost Classification: Cost accounting helps in classifying the costs into fixed costs
and variable costs; Direct Costs and Indirect costs; Factory costs, Administration
costs and selling and Distribution costs, etc.
(4) Helps to earn profits: Cost accounting classifies the total cost into departmentwise,
product — wise and thus helps to focus on cost reduction areas as well as
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