Difference between cost and Management Accounting

Difference between cost and Management Accounting

Management accounting and cost accounting both provides useful information to the management for performing the management functions effectively and both are interlinked in many ways. However Management accounting is deemed to be a wider scope than cost accounting. The main difference between two branches is as under.

Cost accounting

1. Cost of Manufacturing

Cost accounting mainly deals with cost of manufacturing and details analyses of these costs.

2. Stock valuation

Cost accounting provides useful information about for cost valuation and thus plays a vital role in the preparation of final account as stock valuation is one of the primary areas of financial results.

3. Setting price

Cost accountant provides management useful information about the product total price and hence facilitates management in setting an appropriate selling price of the product.

4. Cost controls

Cost accounting provides useful and details information about different cost involved in production process and this information helps the management for cost controls.

5. Reporting

Cost accounting provides useful information for the preparation of annual financial statements. These include cost of goods sold and stock valuation.

Management accounting

1. Decision Making

Management accounting provides useful information to meet decision making need of management.

2. Comparison

Management accounting compares the actual results (variance analyses) with expected results and different control actions are initiated by management on the bases of variance analyses.

3. Planning

Management accounting deals with future cost and future planning i.e. budgeting