What is the Difference Between Costing and Cost Accounting?
🆚 Go to Comparative Table 🆚Costing and cost accounting are related concepts used by organizations to determine the costs of their products, services, or activities. However, they have different scopes and focuses. Here are the key differences between costing and cost accounting:
- Meaning: Costing is the method of assessing the cost of goods produced and services rendered at different stages of the production process. Cost accounting, on the other hand, is an accounting system that refers to analyzing and recording the costs involved in the production of any product.
- Scope: The scope of costing is narrower, as it deals with determining the cost of a particular product or service. Cost accounting has a wider scope, as it is not confined to costing procedures but includes periodic statements, reports, and cost checking and monitoring.
- Nature: Costing is a process and technique of determining costs. Cost accounting is a specialized branch of accounting that revolves around cost computation, cost control, and cost reduction.
- Methods: Costing involves classification of expenses as per the cost elements and allocation of costs to the cost center, evaluating various options. Cost accounting involves the application of cost control methods and computation of profit.
- Role in Decision Making: Costing provides important information for pricing and product mix decisions, while cost accounting information is used for crucial production planning decisions, methods, technology, resources, etc.
In conclusion, both costing and cost accounting are essential for the financial success of an organization. While they share some similarities in terms of objectives, information, methodology, and importance, they differ in their scope, nature, methods, and role in decision-making.
Comparative Table: Costing vs Cost Accounting
Here is a table comparing the differences between costing and cost accounting:
| Feature | Costing | Cost Accounting |
|---|---|---|
| Definition | Practice of identifying costs of any product, service, or activity at various times and stages of production | A method of accounting that records, classifies, allocates, summarizes, analyzes, interprets, and controls the cost incurred on any product, process, service, or activity |
| Focus | Determining the cost of individual products or services | Managing and controlling costs across the organization |
| Types of Costs | Direct and indirect costs | Direct, indirect, fixed, variable, and semi-variable costs |
| Time Period | Specific time period, such as per unit or job | Periodic, such as weekly, monthly, or annually |
| Accounting Principles | Not applied | Applied |
| Decision Making | Not used for decision making | Used by management for decision making |
| Tools and Techniques | Cost sheet, job costing, process costing | Standard costing, marginal costing, activity-based costing |
In summary, costing deals with determining the cost of a particular product or service, while cost accounting is concerned with the overall management and control of costs across the organization. Both are essential for the financial success of a company, as they provide critical information for decision-making, planning, and control.
- Financial Accounting vs Cost Accounting
- Management Accounting vs Cost Accounting
- Costing vs Budgeting
- Job Costing vs Contract Costing
- Bookkeeping vs Accounting
- Accounting vs Finance
- Activity Based Costing vs Traditional Costing
- Absorption Costing vs Activity Based Costing
- Cash Accounting vs Accrual Accounting
- Job Costing vs Batch Costing
- Job Order Costing vs Process Costing
- Accounting vs Auditing
- Price vs Cost
- Financial Accounting vs Management (Managerial) Accounting
- Marginal Costing vs Differential Costing
- Absorption Costing vs Variable Costing
- Cost vs Expense
- Absorption Costing vs Marginal Costing
- Actual Cost vs Standard Cost