The main objective of cost accounting is to provide information to management for decision making. This information can be used to set prices, control costs, and make other decisions that will affect the organization’s profitability.
Cost accounting is a branch of accounting that focuses on the measurement, analysis, and reporting of costs. It is used to provide managers with information about the costs of products, services, and activities. This information can be used to make decisions about pricing, production, and other areas of the business.
Cost accounting is a complex and challenging field. It requires a deep understanding of accounting principles and practices, as well as a strong understanding of the organization’s operations. However, it is a valuable tool that can help managers make better decisions and improve the organization’s profitability.
Here is a brief explanation of each option:
- Option A: Maximise profits of the organisation. This is not the main objective of cost accounting. Cost accounting is a tool that can be used to help managers make decisions that will improve the organization’s profitability, but it is not the only factor that affects profitability. Other factors, such as sales volume, market share, and product mix, also play a role.
- Option B: Determine the selling price of goods and services. This is one of the uses of cost accounting, but it is not the main objective. Cost accounting can be used to help managers determine the costs of products and services, which can then be used to set prices. However, other factors, such as demand for the product or service, also need to be considered when setting prices.
- Option C: Provide information to management for decision making. This is the main objective of cost accounting. Cost accounting provides managers with information about the costs of products, services, and activities. This information can be used to make decisions about pricing, production, and other areas of the business.
- Option D: Help in valuation of inventory of finished goods. This is another use of cost accounting, but it is not the main objective. Cost accounting can be used to help managers determine the costs of finished goods, which can then be used to value inventory. However, other factors, such as the market value of the goods, also need to be considered when valuing inventory.