This paper explains that cost accounting is a part of
managerial accounting: Whereas
financial accounting is concerned with recording actual financial transactions, managerial accounting is concerned with the discovery of relationships in financial data. The author points out that one of the critical factors involved in cost accounting is the differentiation of
fixed costs, which must be borne by a firm regardless of activity levels, and
variable costs, which fluctuate according to activity levels, so that managers are able to construct break-even charts and other decision-making and
control tools. The paper states that the three principal functions of standard cost systems are (1) identifying the actual costs of operation, (2) determining the achievement of the
production operation, and (3) evaluating the performance of the production operation. Table of Contents Introduction Cost Accounting: Definition, Roles, Concepts, and Applications Standard Costs Transfer Prices Summary