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Planning:
In order to obtain objectives,
enterprise has to make plans. Planning is a process
of identifying objectives and selecting actions to
achieve those objectives. A planning procedure
consists of:
1. Analyzing background
2. Identifying objectives
3. Building options
4. Evaluating and selecting optimal options
5. Deciding on plan
For the planning step, cost accountants provide
managers at all levels with information of costs to
do following tasks:
- Identifying plan objectives: cost information
helps identify long-term and short-term financial
objectives of organization and its divisions, they
are indicators of scheduled cost, actual cost,
price and scheduled earnings; to identify these
indicators, cost accountants have to analyze cost
information in the past, estimate future costs
and opportunity costs. These indicators must
be flexible and obtainable to help enterprises
tackle unidentified factors or unexpected
changes of internal and external environments.
Simultaneously, they are fundamentals for timely
and adequately inspecting and adjusting activities
in practice to achieve set out goals.
- Building, evaluating and deciding on
business options/strategies: Cost accounting helps
managers set up earnings, costs, business strategy
and resource plans for each option. Thereby, it
allows managers to exploit and use effectively the
organizational resources, enables organizational
divisions to coordinate and obtain the planned
objectives. In addition, cost accounting provides
appropriate information of costs to evaluate and
select optimal business options/strategies in terms
ROLE OF COSTMANAGEMENT ACCOUNTING IN
TRAN THI NGOC HAN, PhD. - NGUYEN HUONG GIANG –
Academy of Finance*
In an enterprise operation, there are two major types of activities; first, the activities in value chain and
supply chain such as research, designing, production, allocation, sale and administration work; and
second, the activities of managers. Cost accounting helps managers enhance performance of all these
activities.
Keywords: Cost accounting, business, enterprise ooperation, accouns
Received: July 6
th
, 2018
Revised: September 26
th
, 2018
Accepted for publication: October 4
th
, 2018
G
lobalization puts enterprises altogether
in an intensive competition that forces
managers tomake timely and appropriate
business decisions to survive. Therefore,
providing appropriate information, especially
cost information, to managers for strategic
decisions becomes essential as these decisions
entirely involve costs and, hence, cost accounting
is considered as an important management tool
for managers.
Cost accounting, a facet of management
accounting, is a process of recording, analyzing
and providing information of costs for purpose of
internal management. It plays an important role in
supporting planning, implementing, controlling
and decision-making processes of managers.
Costs are closely related to management
decisions and simultaneously are measures
of operational performance. In an enterprise
operation, there are two major types of activities;
first, the activities in value chain and supply
chain such as research, designing, production,
allocation, sale and administration work; and
second, the activities of managers. Cost accounting
helps managers enhance performance of all these
activities.
Firstly,
cost accounting improves performance
of activities in value chain and supply chain of
enterprise.
Towards these activities, cost information
is usually an important source for managers to
function their management responsibilities such
as planning, organizing, controlling and making
business decisions.
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