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Cost Accounting

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Before proceeding to publicize the meaning of the term in question, we will carry out, to better understand this meaning, the establishment of the etymological origin of the words that comprise it. Specifically, both come from Latin.

First, accounting emanates from the Latin word I will compute which can be translated as “count” while, secondly, we can establish what cost comes from the verb costare which is synonymous with "cost."

The accounting is the technique and science which aims to create and disseminate useful data for those who must make economic decisions. For this, study the assets of an individual or a organization and presents its conclusions in documents that are called financial statements or financial statements, which are a summary of an economic situation.

He cost , also know as cost , is the economic outlay that implies the offer of a service or the elaboration of a product . This cost affects the sale price to the final consumer, since it can be said that this price is equal to the sum of the cost plus the profit for the producer.

The cost accounting or cost accounting , therefore, it is the branch of accounting that is responsible for analyzing the contribution margin and the point of balance of the cost of the product. Cost accounting can be understood as a discipline of administrative accounting .

When proceeding to determine what is and what is the aforementioned cost accounting is very important that we take into account that it is developed from the use of a series of elements such as the so-called accounting principles. A denomination is under which terms of great importance are included in the sector such as, for example, economic goods that are the set of goods (material and intangible) that have an economic value and, therefore, can be valued in monetary matter

The accrued, the currency counts, the exercise, the materiality or the equity are other of those principles that are fundamental within the scope of the accounting and, therefore, also in the modality that concerns us.

And all this without forgetting the set of types of existing costs that can be classified based on their modality or the assignment made to an object. This last section would include the indirect ones, which cannot be distributed objectively among the products, and the direct ones that can be distributed objectively.

Typically, cost accounting allows the preparation of financial statements with a view to the short term. It is known as breakeven to the smallest amount of units that a manufacturer must develop and market so that the profit is equal to zero: this means that, at that point, the total costs equal the total revenue per sale. From then on, the company get benefits

Take the example of making a TV . If the manufacturer must spend $ 100 on raw materials and $ 200 on the salary of the workers needed for production, the cost of a television reaches $ 300. This company, therefore, will not be able to sell the TV below that amount since, otherwise, it would lose money . This type of analysis is part of the orbit of cost accounting.

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