Cost Accounting

Cost Accounting is the branch of accounting which is used to measure, record, allocate and summarise cost at various stages of production cycle whether it is fixed or variable cost. Cost Accounting is an invaluable tool for accountant in estimating the future cost and building various cost control techniques.

As this branch of accounting helps in identifying the cost of the product, it would be easier for the management to decide how much price to charge from the customer. Apart from this, the management can decide whether it has sufficient strength to give tough competition to the rivals over the base of cost differentiation. If the company cannot compete on the basis of lower cost, then it would have to go for differentiation strategy. This enables the company to charge higher prices because no other rival offers the same quality product.