Cost Accounting Cost Control - Accounting Basics

What is Cost Control in Cost Accounting?

Business related information is provided to the owner, management, employees and to the government, creditors, investors and customers by accounting.

Financial accounting is based on the actual past and cost accounting is based on planning and controlling and budget preparation is a part of planning and controlling. The management is facilitated an idea about the elimination of the weak performances by comparing the budgeted performance with actual performance.

What are the different Cost Control techniques in Cost Accounting?

The following methods can be employed for controlling the costs:

  • Material Control
  • Labor Control
  • Overheads Control
  • Standard costing
  • Budgetary Control
  • Capital Expenditure Control
  • Productivity and Accounting Ratios

What are the requirements for successful Cost Control?

To implement successful cost control some of the requirements are as follows:

  • A set of well-defined responsibilities are to be assigned to all the executives.
  • The tasks that are to be performed and the cost for executing these tasks need to be clearly defined.
  • A fixed responsibility, in case of deviation between targeted and actual.
  • Delay in information equals to no information and hence the performance data from each department of the organization need to be obtained promptly which enables to take correct decisions.
  • Both good and bad performances need to be highlighted facilitating the management in taking correct steps.
  • Good performances need to be rewarded and the poor performances need to be punished.

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