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Cost Accounting For Dummies by Kenneth Boyd

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Chapter 1

So You Want to Know about Cost Accounting

In This Chapter

arrow Understanding accounting methods

arrow Comparing cost accounting systems

arrow Controlling your costs

arrow Applying a price to your product

arrow Mulling over quality issues

In a nutshell, cost accounting is the process of analyzing and planning what it costs to produce or supply a product or service. The analysis helps reduce costs — and possibly eliminate them. Lower costs, of course, allow for increased profits.

Business folks use cost accounting to determine the profitability of a product. The rule is simple: The price should cover the product cost and generate a profit. Competition may dictate the price charged for a product. In other instances, a profit is added to a product cost to create a unique price.

This chapter introduces cost accounting and how to compare and contrast cost accounting with other accounting methods. The chapter also explains how cost accounting can help you improve your business, such as by using pricing, budgeting, ...

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