A cost accountant in a manufacturing organisation plays several important roles
i. He establishes a cost accounting department in his concern.
ii. He ascertains the requirement of cost information which may be useful to organisational managers at different levels of the hierarchy.
iii. He develops a manual, which specifies the functions to be performed by the cost accounting department. The manual also contains the format of various forms which would be utilised by the concern for procuring and providing information to the concerned officers. It also specifies the frequency at which the cost information would be supplied to a concerned executive.
Usually, the functions performed by a cost accounting department includes -cost ascertainment, cost comparison, cost reduction, cost control and cost reporting.
a. Cost ascertainment, requires the classification of costs into direct and indirect. Further it requires classification of indirect costs (known as overheads) into three classes viz., factory overheads; administration overheads and selling and distribution overheads. Cost accountant suggests the basis which may be used by his subordinates for carrying out the necessary classifications as suggested above.
b. Cost comparison is the task carried out by cost accountant for controlling the cost of the products manufactured by the concern. Cost accountant of the concern establishes standards for all the elements of cost and thus a standard cost of the finished product. The standard cost so determined may be compared with the actual cost to determine the variances. Cost accountant ascertains the reasons for the occurrence of these variances for taking suitable action.
c. Cost analysis may also be made by cost Accountant for taking decisions like make or buy and for reviewing the current performance.
d. Cost accountant also plays a key role in the preparation of cost reports. These reports help the executives of a business concern in reviewing their own performance and in identifying the weak areas, where enough control measures may be taken in future.
In brief, one may say that there is hardly any activity in a manufacturing organisation with which a cost accountant is not directly associated in some form or the other.
In brief, one may say that there is hardly any activity in a manufacturing organisation
with which a cost accountant is not directly associated in some form or the other.