Cost accounting, the different cost types that basically constitute the cost of a product or service; realization locations are the name given to the system that is determined in terms of the product or service it is related to, allows to be followed, and built-in an account system.
Manage your business by Prosoftly
You can use Prosoftly Business Management Software to manage your business more effectively.
What is Cost Accounting?
Cost accounting concerns the inside of a company. It is one of the most important factors that determine what should be the correct price for the sale. It's also substantial what should be the profitability of the company by costing the action performed by the service produced in the operational sense in the most accurate and effective way. The most significant purpose of applying cost accounting is to calculate the actual cost of a product or service produced in a company. The cost can be estimated by companies, but cannot be known with certainty. It is very difficult for a company to determine the cost instantly.
Technologies such as ERP and MRP should be included in the business and thus effective use should be provided. Knowing the price of the product and service produced helps us determine its sales. While determining the sales price, the cost calculation is usually made, but mistakes also occur in these calculations. Companies ask themselves, "Is the rate of profit I calculated in reality?" question should be asked. In order to solve the accounting problem, it is necessary to establish a very serious cost accounting, which also helps to keep the cost under control.
Cost accounting aims to determine the real profit rate and cost by comparing the actual costs with the costs determined in the account, to make researches, and to make improvements on this subject. It also helps with planning. The accurate calculation, distribution, and implementation of costs in the processes from production to sales planning is one of the most important issues we encounter. The concept of cost includes expenditures, assets owned by the firm, fixtures, production machinery, tools, and revenue (revenue / net sales amount). It is the name of the system in which these concepts are distributed to the right items in the most accurate way and ultimately provides the most accurate data for decision-making with the concept of cost accounting.
Management accounting is a higher title that includes cost accounting. Applying management accounting means that it includes cost accounting automatically. When a company is first formed, accounting starts from the state. The state does not freely release companies on its own because it must tax to survive. The state forms the basis for the company, the law, the trade climate, and in order to do this it receives direct or indirect taxes on large profits. In order to calculate taxes, it asks companies to record information about their income and expenses. State pushes data towards a single template to interpret.
Whereas, management accounting requires very different accounting techniques rather than the state constraints on the form. It is the most important structure for the company that will enable the management to take decisions and provide data for its strategic decisions, not with the standards set by the state, but entirely within itself. It requires the production, systematic execution, and reporting of data related to the subjects such as realized cost, income, cash flow, various financial ratios, stock turnover rates, principal test rates, and reporting within the framework of a basic system. Management accounting is called management reporting set design service in consulting language. As the management understands and guides the company's strategic decisions; It is the name given to the way accounting is kept and pushed to management. Cost and management accounting are two basic concepts that take the financial affairs and financial processes of companies from a routine process to a strategic process. If a company wants to transform its financial affairs and finance department into a strategic structure, the two things it must inevitably do are as follows;
- To establish and effectively implement the cost accounting system,
- To establish the management accounting system and to activate it effectively.
The above two points have conditions such as setting up the system, designing its organization, designing its processes, and placing the right people there. In today's complex and fast world, setting up and implementing a cost and management accounting system cannot be done without technology. It is necessary to adapt software and technologies in which data can be received, analyzed, and interpreted accurately, instantaneously, and realistically. A mistake that companies often make in the technology part is to do the job indirectly. The point that companies should do or should start to streamline cost accounting or similar processes is that it is enough to buy and install the software. However, getting the software and installing it should be the last step. The first step is to design the organization, process, and workflow system.
Cost accounting is to design the general financial affairs activity model and the general business management information flow, model. Software selection should be made according to how the data required by the model will be used, transmitted, reported, and visualized after the model is designed. The problem is not solved when the software is purchased, the important thing is to bring the single or different software that can be integrated into the company after designing the system and operating model.