write:The above functions of management cannot be satisfactorily carried out by financial accounting because of its limitations. Cost accounting is very helpful in performing the functio

it involves decision-making. All rational decisions are based on accounting information. Decisions may relate to various problems like (i) fixation of price (ii) whether or not price should be reduced for increased level of sales (iii) whether a change in production should be followed (iv) whether or not factory should operate at full capacity (v) determination of the most profitable levels or production (vi) whether to make or buy a spare part (vii) whether a new product should be introduced in the market (viii) whether the product should be exported or not (ix) whether a particular market should be tapped or not (x) whether a product should be discontinued to avoid the present loss and (xi) whether or not an investment in a particular asset will be worthwhile.Controlling:Controlling is that part of the management activity whereby managers compare actual performance against the planned performance
find out the deviations and take remedial steps to remove the deviations. Immediate action should be taken to remove the deviations to make an improvement in the performance because promptness is the essence of an effective control. Thus
control helps correction. Planning and controlling are interlinked with each other because a manger cannot control unless he has planned a course of action.The above functions of management cannot be satisfactorily carried out by financial accounting because of its limitations. Cost accounting is very helpful in performing the functions of planning decision-making and controlling effectively.Cost accounting helps management in carrying out efficiently its functions (i.e. planning budgeting
decision – making
pricing and evaluation of operating efficiency) by developing practical cost procedures that provide information useful in controlling the operations of the business enterprise. Cost accounting does this by analyzing
reporting and recommending. Cost accounting methods supply the basis of factual information on which management can build up it s presentation of planning and control. In fact
cost accounting is so closely allied to management that it is difficult to indicate where work of cost accountant ends and managerial control begins. To quote blocker and weltmet
“In general
it may be said that cost accounting is to serve management in the execution of policies and in the comparison of actual and estimated results in order that the value of each policy be appraised and changed to meet future conditions.”A good system of cost accounting serves management in the following ways:(a) Classification and sub-divisions of costs:Costs are collected and classified by various ways in order to provide information to the management for control purposes and to ascertain the profitability of each area of activity. It enables a concern to measure the efficiency
and then to maintain and improve it. Unprofitable activities are disclosed and steps can be taken to make an improvement in those activities.(b) Control of Materials
Labour and overhead costs”An efficient check is provided on stores and materials
stores ledger and material Abstracts are maintained which provide an effective check on the stores and material used in a business. BY adopting the maximum limit for stores the total capital outlay is controlled and total financial loss due to over-stocking is obviated. Information of stock of various materials and stores is constantly available. This helps in planning the production according to availability of materials and fresh stocks can be arranged in time. Loss due to carelessness or pilferage or any other mischief is detected and steps may thereof
be taken to minimize such loss in future. An efficient check on labour and machines is provided by giving detailed information about the availability of machine and labour capacity. The work is so planned that no section is over – worked and no section remains idle. The maintenance of time and job cards for workers discloses the loss incurred by idle time and indicates the directions in which losses may be minimized. The relative advantages of remunerating labour on the time or piece work or premium plans may be ascertained. It also measures the efficiency of the wages system in use. Cost Accounting thus provides a detailed control of materials and stores and labour costs. Various techniques of materials control are applied in order to avoid the excessive locking up of capital in stock of materials and stores. Idle time should be kept as low as possible. By having proper classification of overheads into controllable and uncontrollable or fixed and variable
it helps to


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