INTRODUCTION
1.1BACKGROUND OF THE STUDY
So much that we are hearing about “Cost accounting”. This cost accounting are two words with differently meaning join together to make up a course that we steely in field of accounting, without cost there will be no account.
Before introduction of this word cost accounting we can view the historical background of cost. Some where arouse the turn of the century cost were caught up in general industrial movement which later became known as scientific management. The role assigned to them was some what subordinate. Therefore cost definition is money outlay in exchange of goods and services, other definition goes like this, it is incurred expenditure occur on exchange of goods and services. While accounting has been define by Squiter and muder down in his book titles “Accounting theory and practice as a reporting activity that forms party of any management information system.
Cost accounting in an area in accountancy which has developed very rapidly in the recent years, and there can be no doubt about it’s growing importance in the modern production methods. The growing need of cost accounting in business organization could be partly attributed 60 huge capital involvements, higher proportion of indirect costs, widening markets, competition and improved technology, these factors, however establish the need for proper and accurate keeping of records for cost ascertainment.
Cost accounting, originally referred to as ways of gathering and assigning historical costs of units of products and departments specifically for purposes of products and departments specifically for purposes of inventory valuation and profit determination. Fundamentally, cost accounting refers to the gathering and providing of information to the management needs for its daily operations, making important decisions and formulation of policies for the present and future activities if the organisation. Cost accounting also assists, in fulfilling the legal requirements of reporting of shareholders, creditors, government agencies and other external parties.
Cost accounting is the process of accounting for cost while beings with the record of income and expenditure or the bases on which they are calculates the ends with the preparation of statistical data. As has been said, it is the formal mechanism by means of which costs are ascertained and should not be confused with costing.
It should be noted that cost accounting deals with the recording, not only of expenditure, but of income. This is accordance with the present day conception of a cost accounting functions, which now embrace the ascertainment of selling and distribution and their measurement in relation to sale. The cost account is also concerned with the income arising from the sale of scrap and similar item which go to reduce costs. It should also be noted that the preparation of statistical data, which summarizes the information collected during the process of accounting for cost, falls within the scope of cost accounting.
The institute of cost management accountants (IMA) define cost accounting as the application of accountancy and costing principles, methods and techniques in the ascertainment of costs and the analysis of savings and of excess as compared with previous experience or with standard.
TABLE OF CONTENT
COVER PAGEI
TITLE PAGEII
CERTIFICACTIONIII
DEDICATION IV
ACKNOWLEDGEMENT V
PREFACEVII
CHAPTER ONE
Introduction1
Background of the study1
Objectives of the study4
Scope and limitation6
Significant of the study6
Definition of terms7
CHAPTER TWO
Review of literature11
Cost determination11
Cost control12
Fixed and variable cost13
Natural and functional classification14
The transfer finished goods in industry firm18
The transfer to cost of sales in venture18
Deforming the cost structure of fire pricing purposes20
The nature of problem26
Summary of literature of review37
CHAPTER THREE
Summary of findings39
Recommendation39
Conclusion45
Bibliography 47