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What Is The Advantage Of Cost Accounting? How You Can Describe It? Tell Me?

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Profitable and unprofitable activities are disclosed and steps can be taken to eliminate or reduce those activities from which little or no benefit is obtained or to change the method of production in order to make such activities more profitable. It provides information upon which estimates and tenders are based. In case of big contracts or job, quotations cannot be given unless the cost of completing the contracts can be found out. It guides future production policies, it explains the cost incurred and profit made in various lines of business and process and thereby provides data on the basis of which production can be appropriately planned.

It helps in increasing profits by disclosing the sources of loss or waste and by suggesting such controls so that wastages, leakages and inefficiencies of all departments may be detected and prevented. It enables a periodical determination of profits or losses without resort to stocktaking. It furnishes reliable data for comparing costs in different periods, for different volumes of output, in different departments and processes and in different establishments. This helps in maintaining costs at the lower point consistent with the most efficient operating conditions.

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