Coming Soon
Subscription Marketplace - Buy and sell subscription products and services
638 views
in Articles by
Measuring profits or net income is the most important thing accountants do. The second most important task is measuring costs. Costs are extremely important to running a business and managing them effectively can make a substantial difference in a company's bottom line.

Any business that sells products needs to know its product costs and depending on what is being manufactured and/or sold, it can get complicated. Every step in the production process has to be tracked carefully from start to finish. Many manufacturing costs cannot be directly matched with particular products; these are called indirect costs. To calculate the full cost of each product manufactured, accountants devise methods for allocating indirect production costs to specific products. Generally accepted accounting principles (GAAP) provide few guidelines for measuring product cost.

Accountants need to determine many other costs, in addition to product costs, such as the costs of the departments and other organizational units of the business; the cost of the retirement plan for the company's employees; the cost of marketing and advertising; the cost of restructuring the business or the cost of a major recall of products sold by the company, should that ever become necessary.

Cost accounting serves two broad purposes: measuring profit and furnishing relevant information to managers. What makes it confusing is that there's no one set method for measuring and reporting costs, although accuracy is paramount. Cost accounting can fall anywhere on a continuum between conservative or expansive.  The phrase actual cost depends entirely on the particular methods used to measure cost. These can often be as subjective and nebulous as some systems for judging sports. Again accuracy is extremely important. The total cost of goods or products sold is the first and usually largest expense deducted from sales revenue in measuring profit.

Please log in or register to reply to this topic.

Related topics

0 replies 613 views
posted in Articles by Herogue
0 replies 3,570 views
posted in Articles by Octopixy
0 replies 1,059 views
posted in Articles by HairyMagpie
0 replies 1,086 views
posted in Articles by ShowDolphin
0 replies 713 views
posted in Articles by GrizzlyFlash
0 replies 714 views
posted in Articles by VoyageHooper
0 replies 749 views
posted in Articles by BeautifulWolf
0 replies 1,029 views
posted in Articles by FrighteningTwinkles
0 replies 769 views
posted in Articles by Wallaby
0 replies 711 views
posted in Articles by Falconjurer
0 replies 681 views
posted in Articles by Emufasa
0 replies 722 views
posted in Articles by Celestiger
0 replies 738 views
posted in Articles by PositiveVoid
0 replies 669 views
posted in Articles by OpinionOwl
0 replies 751 views
posted in Articles by TrustyKitty
0 replies 719 views
posted in Articles by SleepyFledgling
0 replies 779 views
posted in Articles by GroundHurricane
0 replies 677 views
posted in Articles by SwiftHeroine
0 replies 686 views
posted in Articles by Sumogre
0 replies 712 views
posted in Articles by Mosquiche
0 replies 669 views
posted in Articles by Tabooccaneer
0 replies 1,036 views
posted in Articles by Sassassin
0 replies 963 views
posted in Articles by GamerAlpaca
0 replies 762 views
posted in Articles by MysteryWasp
0 replies 865 views
posted in Articles by GreedySmile
0 replies 714 views
posted in Articles by BumblingBee
0 replies 546 views
posted in Articles by Butcherry
0 replies 577 views
posted in Articles by PlaySeal
0 replies 555 views
posted in Articles by ForceSoldier
0 replies 548 views
posted in Articles by UncleRhino
0 replies 639 views
posted in Articles by HairySeahorse
0 replies 1,031 views
posted in Articles by MagicalCyborg
0 replies 712 views
posted in Articles by HarshThunder
0 replies 664 views
posted in Articles by Knighthawk
0 replies 560 views
posted in Articles by Scorpeon
0 replies 629 views
posted in Articles by Knighttime
0 replies 587 views
posted in Articles by Octopuppy
0 replies 556 views
posted in Articles by SilkPredator
0 replies 557 views
posted in Articles by nicejone
0 replies 597 views
posted in Articles by Finderpros
0 replies 704 views
posted in Articles by LovableStorm
0 replies 686 views
posted in Articles by GiftedWrecker
0 replies 643 views
posted in Articles by AmazingKitty
0 replies 669 views
posted in Articles by Amigod
0 replies 1,131 views
posted in Articles by Cybora
...