cost accounting online course

cost accounting online course

The Importance and Fundamentals of Cost Accounting: An Online Course

1. Introduction to Cost Accounting

A cost accountant is a person who can collect the data with the help of accounting principles that present a true picture of the entity. A cost accountant prepares the accounting reports to present the data so that the future revenue and future expenses can be estimated. When the costs and revenues of the future are known, the decision regarding cost control can be taken. The cost should be known to find out the profit of future operations. Hence, cost accountants take the help of accounting principles in cost accounting to make these decisions. Cost accounting principles help the management of the entity. The cost accounting principles presented in this online course would help the people who wish to become cost accountants to learn the fundamentals easily and would help practicing cost accountants and professionals associated with cost accounting to update their knowledge.

Once a business entity is started, the next question is about the operations of the entity. The growth of the entity depends on the decisions regarding sales activities, product pricing, and cost control. Many a business entity drowns due to wrong decisions. Hence, the data should be such that it can be used to make appropriate decisions. The data should be present and future-oriented. It should contain cost data, market data, and the present status of the entity to use for decision-making.

2. Key Concepts and Principles in Cost Accounting

In order for us to appreciate cost accounting and to understand how it is being conducted, we have to be well-prepared and have a thorough grasp of some key or basic concepts and principles related to cost accounting. A good foundation in the fundamentals of cost accounting will certainly be beneficial to all students who opt to have a career in accountancy, managerial accounting, and financial management as well as other professional fields that will require an in-depth analysis of costs in the conduct of their professions. In this article, we will be presenting some basic and important concepts or principles in cost accounting that will be beneficial to students who want to understand cost accounting as well as those who are just starting in their career in accountancy, finance, and management.

Introduction The main goal of this online course in cost accounting is to provide the students with the knowledge and to present the various practices, principles, and techniques currently being used by business organizations in accumulating and analyzing product costs and in applying these costs with respect to production processes and marketing activities. Cost accounting is known to be a continuing and systematic process that takes into account what costs are being incurred by businessmen and how much these costs are in the generation and distribution of their goods and services to customers and consumers.

3. Costing Methods and Techniques

Job Costing Job costing is used for charging costs to jobs and contracts and is applicable to most businesses. Job costing is applied for cost determination when production is carried out only to special orders. It is done under different job numbers. This costing is used for contract work, shipbuilding repair, printing, construction projects, light and heavy engineering, management consulting services, and other similar work. The distinction between a job and a contract lies in the duration of the work undertaken. If the period is short, typically less than a month, then it is called a job. A lengthy engagement is termed a contract. The costs of a contract are recorded over several accounting periods, frequently over a year or more. When looking at each of the jobs, the principles of costing are identical.

The choice of a particular costing method for calculating costs depends on the purpose for which the cost is sought. Costs are calculated for stock valuation, for control purposes, for performance evaluation, for governance, and for decision-making. The businesses use job costing, contract costing, batch costing, process costing, operating costing, direct costing/variable costing, service costing, uniform costing, and historical costing.

4. Cost Accounting in Practice: Case Studies and Applications

The undistributed costs are called period costs because they serve to remunerate the immaterial factors of production if they have regular periodicity. Direct costs are costs that are readily related to the product or cost center. Examples: direct material, cost of direct labor and direct production services, direct depreciation, fuel and lubricant costs for motor vehicles. Indirect costs cannot be easily related to the product or cost center. Examples: supervisor’s salary, indirect labor, indirect production services, production allocation of administrative expenses, depreciation and insurance of the factory buildings. A cost center is any distinctly demarcated part of the entity for which costs may be ascribed.

Many exercises will be proposed throughout our course, often accompanied by their solutions. The characteristic aspects of cost accounting are learned through practice, not by reading a book or listening to the teacher. In fact, we study both the basics and a wide range of cases and applications, enough to prepare the business manager to apply those concepts in practice. With the understanding of the characteristics of cost accounting and its main interlocutors (management and control, production and inventory valuation, and calculation of the cost for the purposes of contracts and providing services), here begins our study of cost accounting, addressed in topics 4 and 5.

5. The Future of Cost Accounting in the Digital Age

Cost accounting boosts our ability to count, cost, analyze, and report. As digital technologies like artificial intelligence and process robotics continue to outcompete people at counting, costing, and reporting, we as accountants must continue to develop higher order skills related to thinking, communicating, team building, and empathizing. By studying the body of knowledge within cost accounting, we can conduct the job analyses, develop the teaching and workplace learning competencies, support the regulated certification programs, and advise the global corporations and SMEs that will count, cost, analyze, and report effectively and securely in the ever more digital age that is upon us and that is still coming. Cost accounting is a pivotal subject of study in accountancy and other disciplines primarily because of its strategic role in ensuring that private firms and public bodies survive and thrive. Hence, it must change continuously to reflect the contemporary tools and trends that enable excellence in the global knowledge and digital age.

The future of cost accounting belongs to the efficient use of digital analytical tools that deliver good decision-useful numbers. Today, this looks like using electronic data processing systems inter-linked with databases to store and analyze the data generated by transaction processing systems and value chain events. With digital systems, we can take advantage of much cheaper processing and storage costs, as well as the ability to provide real-time costing analytics. In the future, we can look forward to further development and adoption of these solutions based on Industry 4.0 principles providing the driverless future of manufacturing and service solutions. Technologies like cloud-based solutions, business intelligence, robotics and automation, big data, the internet of things, blockchain, additive manufacturing, cybersecurity, and smart factories are going to transform cost data capture and processing significantly. We can also expect machine learning and artificial intelligence solutions to allow for better cost estimates, analysis, and prediction.