The role of cost accounting in project management

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Categories: Project accounting
February 14, 2017
Cost accounting can improve the accuracy of resource planning

Cost accounting can improve the accuracy of resource planning

A successful business needs to have a good understanding of the total profits and losses for the business as a whole. But for real success it also needs to know the profits and losses for every profit center, every department and each project within the business.

Use cost accounting to gain detailed cost information about your current operations and more successfully plan your company’s financial futures. An ERP software solution with a project cost accounting component is what you need to look for. It will help your business allocate resources more accurately.

Cost accounting helps businesses accurately ascertain costs

Cost accounting enables management to accurately ascertain costs by factoring in both variable and fixed costs. It assists in the cost assessment of all facets of business including the cost or processes, products, projects, and contracts by relying on the use of various techniques such as job costing and process costing.

Cost accounting can improve cost-efficiency

Perhaps the greatest benefit of implementing cost accounting is its ability to reduce costs and improve cost-efficiency. It can streamline processes to help identify waste factors, such as wasted time or surplus resources, enabling you to cut back in key areas and improve the cost-effectiveness of the operation.

Cost accounting forms the foundation of an effective budget plan

Budgets are the most crucial aspect of resource planning, and cost accounting forms the very foundation of a successful budget. It can provide the framework for determining the actual cost of all business processes, the cost of each department, and the cost of products and operations, which, together, can be used to inform accurate budgeting for businesses.

Cost accounting can inform better decision making

With cost accounting, you’ll be able to thoroughly evaluate all strategies within the business, including cost-volume-profit analysis, investment appraisals, and the profitability of products. This can improve decision making abilities, as financial decisions will be driven by accurate assessments of all financial influences.

Cost accounting can guide pricing

By factoring in all variables, such as supply and demand, market conditions, and competing businesses, cost accounting can help in determining appropriate pricing of products, as well as the cost of producers.

Cost accounting helps to hone in on the most accurate pricing models.

Cost accounting helps to hone in on the most accurate pricing models.

Cost accounting improves departmental accountability

By more accurately assessing the costs associated with all aspects of business, businesses can develop targets for each department, as well as periodic milestones. This will improve financial accountability, providing each department with the blueprint they need to remain within their budget.

The importance of cost accounting in ERP software

A well integrated ERP software such as Acumatica has the goal of not only streamlining business processes, but also allocating resources in a way that’s more efficient and cost-effective. Acumatica cost accounting supports all of these aims by helping to reduce waste, improve the accuracy of resource allocation, and enhance one’s ability to ascertain the most precise costs, in turn making resource planning more effective.

Acumatica Cloud ERP enables easier balancing of fixed and variable costs, so you can more efficiently and accurately plan for future finances. With built-in cost tracking, you’ll be able to manage inventory, resources, and materials from a single software, gaining the most accurate and up-to-date cost assessment available.

To learn more about cost accounting and resource planning, use the form on the right to contact us today.