Difference Between Cost Accounting and Management Accounting
- Categorized under Accounting| Difference Between Cost Accounting and Management Accounting
Cost accounting and management accounting are two very crucial branches of accounting discipline. Both of them are used by most of the organizations for better functioning. The main user of both cost accounting and management accounting is an organization’s internal management. This creates an impression that both cost accounting and management accounting are same.
The differences between cost accounting and management accounting are of a fine nature and have minor nuances. Cost accounting basically focuses on the quantitative aspects. While management accounting uses a combination of quantitative aspects as well as qualitative aspects.
What is Cost Accounting?
Cost accounting is one of the branches of accounting. It deals with the collection, recording, classification, ascertaining, and analysis of the information and data related to the costs involved in the operations and production processes of an organization.
Cost accounting provides very important and helpful information for costing and helps in pricing. Cost accounting has three main cost elements that are as follows:
Material costs that are mainly classified as direct costs and indirect costs.
Labor costs that are mainly classified as direct labor costs and indirect labor costs.
Overhead costs such as fixed costs, office costs, selling, general and administrative costs, etc.
The main purposes of cost accounting include tracking operations and production costs, fixed costs, and other relevant costs for a firm or organization. Such information helps the organization in controlling and reducing the various costs, and improving its operational performance.
Cost accounting for an organization is usually carried out by its own employees. Cost accounting information and statements are not necessarily reported or submitted at the financial year end.