What is Cost Accounting|| Features Of Costing||Scope,Function& Method Of Costing||Batch Costing, Process Costing,Contract Costing ,Unit Costing etc.||Advantage & Disadvantages Of Costing||Openbook247


The expenses incurred to produce a raw material to finished product is called cost.

In other words cost means the expenses incurred to bring raw material into usable conditions.


The process of recording, classifying, summarising & interpreting costing information is called Cost Accounting.The process or technique of ascertaining cost is called Costing.

Features Of Costing:

1.It is the process of accounting for cost.

2.It records income & expenditure of the production.

3.It is concerned with cost ascertainment & cost control.

4.It involves the preparation of a periodical cost statement.


The technique and concept of cost accounting are used in different forms of organisation in schools, colleges, hospitals and financial institution.The various scope/functions of cost accounting are discussed below.

1.Cost Ascertainment

It involves recording, classifying and allocation of various cost to find out cost of production.It also helps to know total cost per unit.

(ii) cost control

It’s cost information helps to point out the areas of wastage & inefficiency. It also helps to take necessary steps for cost control.

(iii) Preparation of cost statement

It is another important scope of cost accounting it ensures in preparation of periodical statements to know cost information.  

(iv)Managerial guide

It provides sufficient cost information to the management body. It enables them to take effective decision and solve expected problem .

Objective of cost Accounting

1.Ascertainment cost

It is the primary objective of cost Accounting the cost of each job process 8 operation.

2.fixation of selling Price

It provides sufficient cost information to the management body; it enables them to determine selling price by adding a suitable rate of Profit.

3.Find out profit of each activity

It is anothere objective of cost accounting is to delemean the profit of each activity by company the cost with its revenue.

4.increase Good will

It enables an organisation to produce quality good at reasonable price it. indirect help increase reputation & Good will of organisation.

5.Improve efficiency

Its. comparative study among standand & actual cast help to local areas of wastage & ineffiency so helps to take corrective action to increase efficiency.

6.Helpful for Government

The information provided by cost accounting is very much helpful to Government for making policies of import & export .

7.Find out ecpect causes

Cost Accounting also helps to find out expect cause of profit or loss which enables to take necessary steps for Smooth running of origanisation.

Essential of goods costing system

A good costing system most have the following features.


The costing system should be easy to understand & simple to operate. It can be understand by any body at a glance.

2. Flexibility

The costing system should be a flexible one, show that changes can be made accounting to situation.


The costing system shouldn’t be enpenssive it should be adjusted according to the financial capacity.


It should be provide sufficient information show that comparision canbe made among various departments.


A good costing system should be helpful to improve the efficient and effectiveness of different factors production.


There are two types of costing method are used usually

1.Specific Order costing

2.Operation Costing

1.Specific Order costing

(A)Job Costing

The Costing method which is used to find out the cost of each job or work order is known as job costing.It is used in different industries like -:

Printing Costing

Repair Shop


Painting etc

(B)Batch Costing

The Costing method which is used for the ascertainment of cost of batch having identificial product is known as batch costing.It is used indifferent industries like.

Toy Manufacturing industries

Readymade Garments

Shoes Manufacturing industries

(C)Process Costing

The Costing method which is used to findout the cost of a product that passes through various stages to become a final or finished product is called Process Costing.It is used in different industries like:

Textile Industries

Paper industries

Sugar Manufacturing Industries

Chemical Industries

(D)Contract Costing

The costing method which is used to find out the cost of each construction or engineering work is called Contract Costing.It is used a different industries like

Construction of building

Construction of bridge

Construction of Dan

(E)Unit Costing/Single Output

The Costing method which is used to know the cost of a product where production is continuous and unit produced are indentical is called Unit Costing.It is used in different industries like 

Cement Manufacturing industries

Brickes Manufacturing industries



Flour Mill

Shop Manufacturing

(F)Multiple/Composite Costing

The process of applying two or more costing method combinedly to ascertain the cost of a product is called Multiple or Composite Costing.It is used in different industries like:

Motor Vehicle Manufacturing

Aircraft Manufacturing

Automobiles industries

Television Manufacturing

(G)Operating /Service Costing

The costing method which is used in the industries providing service or operate facilities is called operating costing.It is used industries like


Banks sector

Power House


School etc

Washing Machine Manufacturing

(H)Firm Costing

The costing method which is used to calculate total cost and cost per unit of various farming activities is called firm costing.It is used in industries like





1.It records both Monitary and Non Monitary transaction for the mangement.

2.It provides some usefull and important information to the mangement.

3.It helps to know the total cost and cost per unit.

4.The closing stock Valued at Cost price on it.


1.Cost accounting isn’t an exact science.

2.Cost accounting doesn’t follow uniform procedure and method.

3.Cost accounting is based on estimation and imagination.

4.It is very expensive for organisation or industries to maintain on day to day business.

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