Cost Accounting vs Financial Accounting: What is Right for Your Business
Discover the differences between cost accounting and financial accounting. See how they optimize operations, support compliance, and drive profitability
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Cost Accounting
Leverage our cost accounting services to help optimize your production costs and maximize profitability.
Cost accounting focuses on tracking, analyzing, and managing production costs of goods and services. This process allows for the proper assignment of costs to inventory while identifying areas for improvement or where changes in process may be needed.
Key cost accounting benefits for your organization
Cost accounting is also essential to the budgeting and financial planning process and helps organizations:
- Determine product pricing and profit margins
- Control and reduce non-value-added costs
- Evaluate production processes for inefficiencies
- Make decisions regarding expansion, asset purchases, or outside processing
Scaling demands advanced cost management
The concept seems straightforward, but manufacturers often don’t appreciate the need for robust cost accounting until trying to scale their businesses. As complexities in production arise, general accounting teams may struggle to identify the appropriate inputs for costing and incorrectly spread pooled costs to inventory. The ability to separate production into individual processes sometimes becomes unclear. Over time this leads to difficult decision making and improper inventory valuation at both the overall and unit cost levels.
Related Insights
BPM’s approach to cost accounting excellence
BPM realizes the involvedness of cost accounting and the value costing and inventory data can give to an organization. By allowing us to step in to understand your business, we will be able to leverage industry best practices and experience to provide the many benefits cost accounting has to offer. Some of the regular aspects of these services include:
| Inventory reconciliations | Inventory costing | Labor and overhead rate calculations | Inventory reserve/provision calculations |
| BOM & routing analyses | Make vs. buy decisions | Ongoing process improvements and data cleanup | Ad hoc analyses for specific decision making |
| Monthly/Quarterly – variance analysis, in-transit & aging inventory updates, COGS calculations, etc. | |||
Meet our Cost Accounting Leaders
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