Return on Software: Maximizing the Return on Your Software Investment

Cost Accounting

Cost accounting is a specialized branch of general accounting and was developed in about 1919. Companies use cost accounting to find out how much it cost to provide the products and services that were sold during a reporting period. That cost is shown in a cost of goods sold statement and is one of the expenses in the profit and loss statement. Cost accounting is important because the cost of production often has a major influence on profit and should be carefully managed. Cost accounting helps the company maintain cost control on manufacturing expenses.

In a typical manufacturing company, costs are accounted as the product flows through the production process. This is diagrammed in Figure 15.5.

Figure 15.5. Cost accounting through ...