Judul : Function of Cost Accounting in the Complete Service Company
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Function of Cost Accounting in the Complete Service Company
Function of Cost Accounting in the Complete Service Company
The cost accounting system records finance which includes the preparation of production costs, the sale of services in a certain way, and an explanation of all transactions in the accounting cycle of a service company. Cost accounting is needed for accountability to external companies and internal parties. Financial data presented is historical in nature which is needed by management to make decisions or policies in the future.
Cost accounting is the most important part that is needed and has an impact on the continuity of production because it determines the future of the business strategy. To produce a record of cost accounting, of course a company must have a record of each transaction properly and correctly in order to avoid the wrong calculation in the preparation of financial statements.
The cost accounting function is as follows.
1. As a Basis for Planning Company Activities
Cost accounting is the basis of financial information needed in the preparation of financing plans and expenses that will be incurred by the company when providing services or providing services to customers or service users. The usual estimation carried out in accordance with the principles of accounting in the form of historical data with consideration of other factors that are predicted to affect costs.
In planning and controlling costs, the management will monitor so that there are no deviations (the difference between the real costs and planning costs). If there is a deviation usually the management will analyze the cause of the difference and consider corrective actions that should be done as a form of control.
2. To determine the cost of goods
The cost accounting system of a service company must determine the cost of production of each service provided so that the selling price can be determined (how to calculate the cost of goods sold) after the nominal or percentage of the desired profit is determined. Prices offered may not be too high or too low for consumers to consider competitors and customer satisfaction. The process carried out includes recording, classifying, monitoring, and summarizing all cost components related to the production process from historical data that is used as a basis by the management in determining the cost of production.
3. Controlling Costs
Historical data can also be used to control costs so things can be known to cause an increase in production costs. Cost control must consider other factors that are expected to affect costs. In planning and controlling costs, the management will monitor whether there is a deviation (there is a difference between the actual costs and the cost planning). If there is, the management will analyze the causes of the difference and consider corrective actions that really need to be done as a form of control.
4. As a basis for calculation and reporting
Service companies of course require detailed cost of production of services formed from workers' wages, costs of using resources and other energy sources, as well as the amount or percentage of profits earned by the company. Then the service company requires financial statements that record all customer transactions or company service users.
5. As a basis for compiling company budgets
Service companies certainly determine the budget so that operational activities can be controlled. The existence of a budget will make it easier to control all activities so that they will not exceed the budget that causes losses to the company. Cost accounting also provides information about all financing so that management or stakeholders can properly manage the company.
Previously, it had known the cost accounting function in manufacturing companies, now knowing the functions in service companies that make it easier for readers to study cost accounting further which includes cost accounting characteristics, cost accounting cycles, and cost accounting goals.
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