Cost accounting assignment 2

Q1. What is the difference between cost control and cost reduction?
Ans. Cost control maintains the cost in line with predetermined standards. It aims
to attain lowest cost in existing conditions. Whereas cost reduction challenges the
standards set and seeks to lower the cost even further. Cost control is a
preventive function whereas cost reduction corrective function.

Q2. What is the difference between Costing and Cost Accounting?

Ans. Costing is the processes and techniques used in ascertaining costs. These
techniques consist of principles and rules which govern the procedure of
ascertaining costs of products and services. Whereas cost accounting deals with
classifying and summarizing costs and recording them in financial statements.
Only cost accounting is used by management to make decisions.

Q3. What do you mean by Scope of cost accounting? How is it different from
objectives?
Ans. Scope consists of the following functions;
 Costing: it refers to the techniques and processes used in ascertainment of
costs of products. They are overlooked by certain principles and rules
depending upon the industry.
 Cost accounting: it deals recording, classifying and summarizing costs and
end with preparation of statements for controlling costs.
 Cost analysis: it is concerned with critically evaluating the factors
responsible for variance of costs from the set standards.

Objective of cost accounting Is to eliminate any inefficiencies in production

process to ensure that the goods are produced at the lowest costs, whereas the
scope of cost accounting is to modify the cost to maximize the profits.