Cost Accounting

What is 'Cost Accounting'

Cost accounting is an accounting method that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs, such as depreciation of capital equipment. Cost accounting will first measure and record these costs individually, then compare input results to output or actual results to aid company management in measuring financial performance.

Development of Cost Accounting


    Scholars have argued that cost accounting was first developed during the industrial revolution when the emerging economics of industrial supply and demand forced manufacturers to start tracking whether to decrease the price of their overstocked goods or decrease production.

    During the early 19th century when David Ricardo and T. R. Malthus were developing the field of economic theory, writers like Charles Babbage were writing the first books designed to guide businesses on how to manage their internal cost accounting.

    By the beginning of the 20th century, cost accounting had become a widely covered topic in the literature of business management.

  • Development of Cost Accounting
  • Standard Cost Accounting
  • Activity Based Costing
  • Lean Accounting
  • Marginal Costing
  • Direct Cost