FollowCost accounting is the process of examining, archiving, classifying, and generally abstracting all of the different factors that play into a company’s quality of cost control.
Through high-quality cost accounting, a company’s management personnel will be able to adopt the most effective actionable policies towards maintaining high cost efficiency. Cost accounting is a very technical process, and so fittingly, those who aspire to have a profession and cost accounting need to be able to make sure that they have high attention to detail.
Specific Roles and Responsibilities of a Cost Accountant
Because the cost control decisions that a manager makes are going to be uniquely relevant to their own organization, it is not necessary for a cost accountant to analyze data similar to other organization’s information; instead, the cost accountant will simply have to make sure they are intimately familiar with their own company’s history of cost control.
Though it is not necessary for a cost accountant to analyze information that is similar to other organizations, a diversified portfolio of experience from multiple organizations can still come in very useful for handling cost control issues that may call for dynamic problem-solving. Generally, a cost account will be tasked with both accurately managing the company’s costs and creating efficient budgets for maximum cost control.
It’s generally necessary for a cost account to have at least a bachelor’s degree in order to be considered for the position, but in certain circumstances, an associates degree can be acceptable if the hiring company sees fit. Some perspective cost accountants might also earn additional credentials by becoming a Certified Management Accountant (CMA), according to Investopedia.
The Cost Accounting System
A cost accounting system is essentially a special network that firms employ in order to have a stable solution for cost control optimization. In addition to specifically handling cost control, a cost accounting system is also integral for inventory valuation and profitability analysis.
There are two distinct variations of cost accounting systems that cost accountants will have to be aware of: job order costing and process costing. True to their names, process costing separately aligns each process with manufacturing costs, while job order costing separately aligns each job to manufacturing costs.
In a situation where a company’s cost accounting system is a combination of features from both job order costing and process costing system, the system is called a hybrid cost accounting system
One of the most important things to understand about the cost accounting system is that it is distinctly removed from the regulations that are outlined by the Generally Accepted Accounting Principles (GAAP). The lack of uniform adherence to the GAAP is yet another reason for cost accountants to focus on specializing in the unique cost accounting system employed by their own company.
Related Resource: What is an Accounts Receivable Clerk?
Job Outlook and Summary
On average, a cost accountant earns an annual salary of between $50,000 and $60,000 depending on their skills and experience. According to the Bureau of Labor Statistics, accountants are expected to see an industry job growth rate of about 11% by the year 2024; this job growth rate is slightly faster than what typical for most occupations.
