Читать книгу Cost Accounting For Dummies - Kenneth W. Boyd - Страница 20

Cost accounting plays a role in your budgeting process. You might think of budgeting as just forecasting sales and planning expenses. If you own a flower shop, you budget by forecasting sales of each type of flower or arrangement. You also plan expenses, such as utility costs for the shop and your lease payment.

Your work with cost accounting takes budgeting to a new level of detail. Until now, you looked at costs by type (utilities, lease expense). Now, you analyze cost by type and by product (for example, those roses need to be kept in a cooler, which requires electricity). Based on the product’s costs and sale price, you can compute a profit.

So start off with an analysis of each product’s cost, price, and profit. Build on that information. You could then put together a budget for each department. Finish up by combining all your smaller budgets into a company-wide budget. That company-wide budget will give you all the company’s costs by type and your revenue total. You build your company-wide budget based on cost accounting by product.

By starting your budget at the product level, your budget is a lot more specific. When you compare your actual results to your budget, you’ll see the differences in more detail. The detail lets you make more precise changes in your business going forward.