Sometimes, spare capacity can be used profitably.The total cost of a product is available in the costing records.

If so, correct and reliable data was available from the costing records which are highly useful to the government, share holders, the creditors and the like.The limitations or disadvantages of cost accounting are listed below:1. It grants more useful business analysis. For assessing the financial position, we need to depend upon financial accounting.Cost Accounting cannot find out the tax liability of the company. It cannot be treated as a basis for calculating it. Cost accounting will help you measure this. All cost elements are recorded, summarized and presented in a better way for proper understanding by the internal users of the organization.Cost accounting serves the main purpose of ascertaining the cost of products. Under cost accounting, budgets are prepared and standards are fixed for each activity. Therefore cost data are not very useful.Cost Accounting uses secondary data from financial statements for various calculations like standard cost. 3. It gives detailed information regarding all fixed and variable expenses involved in manufacturing which helps firms in fixing the right prices.Cost accounting maintains a systematic record of all stock of inventories and raw materials. This data is used for analysis or comparison with industry which evaluates the overall efficiency.Cost accounting assists management in determining the profitable and unprofitable activities of the business.

Cost accounting is a process of finding out the cost of the products or goods.

1. Other than that, the disadvantages of historical cost accounting concept are unrealistic profit. Hence, cost data are not highly useful.3. It involves various steps like Cost Ascertainment, Cost Reduction, Cost Control, ascertaining the profit and many more which make … The actual performance is compared with standard to find the variation. Disadvantages or Limitations of Cost Accounting. Cost Accounting is a branch of accounting concerned with recording and analyzing the cost elements of the organization. It collects and records data with respect to cost, time and expenses. Search in posts Only past performances are available in the costing records but the management is 2. 110/-. For instance, when you purchase expensive machinery to be used over the next decade, its cost will be spread over such a period. The cost is ascertained on the basis of full utilization of capacity. The cost of previous year is not same in the succeeding year. Cost accounting allows for data that enables the firm to measure efficiency. It only records past cost records whereas management is taking decision regarding the future. Delay in receiving costing information does not result in taking quality decision by the management.9. 1. So, it will lead to an overstatement of profit during the inflation period. Exact matches only Advantages and Disadvantages of Marginal Costing: 8 Points Advantages of Marginal Costing: The advantages to be gained from a system of marginal costing may be summarised as follows: 1.
The management can rightly choose the best out of many alternatives. It requires many formalities to settle down this process and also needs lots of paper works which makes it quite costly.Cost Accounting ignores the futuristic situation of the product cost.

There are also disadvantages of Cost Accounting that are as follows-System is more complex-Cost Accountant records all the types of Cost Information at every level of production. Say for example the cost of producing one unit increased from Rs.100/- to Rs.

Cost Accounting fails to solve the problems relating to work study, time and motion study and operation research.8. It does not include primary data or short term data. Cost Accounting is a branch of accounting concerned with recording and analyzing the cost elements of the organization. The cost is ascertained on the basis of full utilization of capacity.


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