Cost accounting is the process of determining the costs of goods and services. It involves recording, classifying, and allocating expenditures to calculate the costs of various goods and services. This data is then presented in financial statements and used for cost control and management guidance. The objectives of cost accounting include cost finding, cost control, cost reduction, price fixation, and providing information for business decisions. The advantages are cost ascertainment, efficiency measurement, identifying unprofitable activities, price fixation, inventory control, and cost control. The disadvantages include lack of uniformity, cost, ignoring future situations, and using secondary data.

1. SRM INSTITUTE OF SCIENCE AND TECHNOLOGY
FACULTY OF SCIENCE & HUMANITIES
DEPARTMENT OF COMMERCE
UCM18501 – COST ACCOUNTING – I
SUBJECT HANDLER : U. KARTHIGAI SELVI

2. UNIT - I
• MEANING OF COST:
It is the amount to be paid for a good or service or the resources given in
exchange for such good or service
• MEANING OF COST ACCOUNTING:
It is a process via which we determine the costs of goods and services. It involves the recording,
classification, allocation of various expenditures, and creating financial statements. This data is
generally used in financial accounting.
This helps us calculate the costs of the various goods. It also involves a suitable presentation
of this data for the purposes of cost control and guidance to the management.
It deals with the cost of every unit, job, process, order, service, etc, whichever is applicable
and includes the cost of production, cost of selling and cost of distribution.

3. • DEFINITION OF COST ACCOUNTING:
According to Wheldon, “Costing is the classifying, recording and appropriate allocation of
expenditure for the determination of the costs of products or services, and for presentation of
suitably arranged data for the purposes of control, and guidance of management”
• OBJECTIVES OF COST ACCOUNTING:
i. Cost Finding or Cost Ascertainment
ii. Control of Cost
iii. Reduction of Cost
iv. Fixation of Selling Price
v. Providing Information for Framing Business Policy

4. • ADVANTAGES OF COST ACCOUNTING:
i. Ascertainment of cost
ii. Measures and Improves Efficiency
iii. Identifies Unprofitable Activities
iv. Price Fixation
v. Inventory Control
vi. Control Cost
vii. Identifies Reasons for Losses

5. • DISADVANTAGES OF COST ACCOUNTING:
i. Lack of Uniformity
ii. Costly
iii. Ignores Futuristic Situation
iv. Uses Secondary Data
v. Only Bring Out The Cost Of Goods

6. SCOPE OF COST ACCOUNTING:

8. • INSTALLATION OF COST ACCOUNTING:
i. Requisities of a good costing system
ii. Steps necessary to install the system
iii.Problems or practical difficulties in installing a costing system
iv. Steps to be adopted to overcome practical difficulties