Users of Cost Accounting
I. Internal Users of Cost Accounting
1. Managers: Managers are the one of the important internal users of cost accounting. They use cost accounting to gather information about cost centers and cost objects, to gather information about the pricing of the product, to evaluate and measure performance of responsibility centres, and to evaluate and calculate profitability- product wise, department wise, customer wise.
2. Operational Level Staff: Operational level staff uses cost accounting to know the objectives and goals set on them, to understand the specifications like volume, quality, process, etc., to understand the parameters of performance by which there performance will be measured, and to Know the profitability and variances under different divisions.
3. Employees: Employees use cost accounting to know thier work efficiency, to understand the different bonus plan in action by the organisation like Rowan or Halsey bonus plan, and to understand the variances in there performance, and increase there efficiency.
II. External Users of Cost Accounting
1. Regulatory Authorities: Authorities use cost audit data, to ensure that they comply with the cost accounting principals, and the records shows true and fair view. Cost accountings also helps regulatory authorities to determine the tariff, subsidies, and fixation of rate.
2. Shareholders: Shareholders consume cost accounting information that might have significant bearing on their investment in the organisation. Shareholders require information regarding the new work orders, market expansion, cost share, etc. to make informed investing decisions. Management periodically communicates all the ongoing via meetings, annual reports, etc.
3. Creditors and Lenders: Creditors and Lenders consume the cost information to analyse the key factors which might effect the organisation’s ability to pay off it’s lenders and creditors. Creditors and Lender also consume other costing info to understand the business, in order for mergers and acquisition so that they will get the information about the business.
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