What is cost management accounting?

What is cost management accounting? Objectives and methods of cost management accounting

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Cost management accounting is an issue that any business or organization involved in business and production activities is of primary concern. Therefore, the optimization of total costs is considered an important factor leading to the success of the business. In today's post, Johnson's Blog will help you get more information about this content.

What are business expenses?
What are business expenses?

What are business expenses?

Business expenses is the amount of money that an enterprise must spend to serve the operation of all production and business needs of the enterprise. Business expenses including production costs, rental costs for working locations, taxes payable to the State, expenses for maintenance of facilities or fixed assets, etc. 

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What is cost management accounting?

Cost management is considered an important part of the management accounting system. It is an important information channel to provide information about the costs of the business for the evaluation and financial consumption activities of the business so that managers can make the most optimal decisions. 

The content of cost management includes items such as cost classification, total cost accounting necessary for product pricing activities, monitoring and analysis of information on cost fluctuations along with the construction of the product. Prepare cost management accounting reports. 

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Objectives of cost management accounting in business

Objectives of cost management accounting in business
Objectives of cost management accounting in business

Objectives of cost management in the business is to clearly determine the costs that the business needs to be able to conduct research on pricing strategy of the company's products, besides also to provide a source of information for the management purposes of leaders. 

Cost management accounting is also considered an important factor to help managers and policy makers of enterprises make more rational decisions.

>>> See more: Business strategy model what? How to design a business model?

Cost management accounting methods

Here are a few methods of cost management in business.

Targeted cost management 

This is a set of management tools for calculating cost goals from the planning stage to the new product design stage. 

This method is used to control the product production process and help ensure the profit target that the business has set. Targeted cost management method to reduce the total cost of production of products with the support of manufacturing departments, R&D departments as well as marketing departments. 

In general, cost management by objective is used to calculate the total cost of production and sales, the profit achieved from the estimated price. 

Target cost management accounting
Target cost management accounting

This method helps businesses optimize the product cycle, life cycle, avoid wasting time on unnecessary stages, helping businesses increase competitive advantages in the market.

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Kaizen cost management

This method focuses mainly on minimizing the total cost of the business. Kaizen is understood as change for the better, also known as improvement. 

This Kaizen method is aimed at meeting the profit requirements set by the enterprise during the production and business process. Therefore, it can be said that this method not only focuses on enterprise products but also focuses on the entire production and business process of products. 

Kaizen accounting method helps businesses improve in finding ways to cut costs to the minimum. For example, businesses break down goals to make it easier to cut input material costs and labor costs. 

>>> See more: Business strategy model what? How to design a business model?

Manage costs in a normative way

This is a method of accounting for product costs from stable production processes that enterprises have built. Using this method, it is possible to determine the ideal and the actual cost of the product. 

For example, the ideal cost norm of the product in the condition that there is no machine failure or any interruption, while the actual norm can be achieved with effort. It helps managers have results to compare with actual costs that businesses have to spend, thereby giving the most reasonable product price. 

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Management accounting concepts
Standardized cost management accounting

Word conclude

Here is all the information about cost accounting management for business in general. Nowadays, as technology advances, this also becomes easier thanks to accurate information gathering tools. If you need further advice, don't hesitate to contact Johnson's Blog right now.


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