Cost accounting is a method of evaluating costs, profits and everything in between when it comes to running a business. As an accountant specializing in cost accounting, you will be able to use your accounting skills to alert key decision makers in your company of their options as they make planning and budgeting decisions.

What is the main purpose of cost accounting?
On the most basic level of all, cost accounting is a means of weighing projected profits against projected costs by utilizing the records of the past to predict the future. You will evaluate the cost of raw materials, labor and indirect expenses. Then you will estimate predicted profits. After weighing the costs and estimated profits, you will give advice to decision makers as to what changes need to be made in order to keep the company profitable.

What types of analysis will I need to perform?
Cost accounting is much more complex than simply totaling up all the costs and totaling up all the profits and weighing one against the other. As you delve into the different aspects of running a business, you will need to use different rules of cost accounting to help you evaluate what changes need to made in what departments. You will conduct standard cost accounting analysis, which will help managers determine why some costs were higher and some were lower than estimated. You will also help the company identify how independent aspects of the operations costs are affecting overall costs.

Plus, many cost accountants analyze operations costs using activity-based costing and marginal costing. Activity-based costing will help you make long-term decisions, while marginal costing will help you make short-term decisions.

You will learn the basic rules behind each of these cost accounting practices as you pursue your accounting degree. Through these different processes, you will use mathematical calculations to evaluate input measurement, inventory valuations, cost accumulation and cost flow.

How can I get started in this career?
Cost accounting is a part of a managerial accountant’s career. To become a managerial accountant, you’ll need to get an undergraduate degree in accounting, take cost accounting classes and become a certified management accountant. This certification is similar to that of a certified public accountant (CPA) and will help you gain knowledge about the budgeting, tax and asset-management sides of accounting.