State the three most important need for Cost Accounting ?

Answer 1

1. Ascertainment of cost of product: Product cost is ascertained through the mechanism of cost accounting. For this purpose, various costing methods are applied.
2. Determination of selling price: A business unit is required to determine the selling price at which its products are to be sold. In doing so, a unit should fix up the selling price for its products in such a way so that the costs of the product are recovered. Moreover, in fixing selling prices, regard must be had to the cost structure, conditions of the market, types of consumers and the demand and supply of the product.
3. Analysis and classification of cost of production: Cost Accounting helps to analyse and classify various items of cost incurred which lead to the revelation of various forms of waste, whether of materials, time or expense. Analysis of the causes of unsatisfactory results may suggest possible remedial measures to attain efficiency in the utilisation of resources.