Cost accounting is an input into management accounting. Cost accounting focuses on understanding and optimizing costs in a complex business environment. Management accounting focuses on the bigger picture of using data to make planning and strategy decisions for the company.
Cost accounting tracks and analyzes costs, including material, labor, overhead and time, for every activity performed in producing and delivering goods and services. This information can be used to improve efficiencies and reduce overall cost.
Management accounting uses input from finance, operations, suppliers, customers and competitors to drive internal decision-making and planning.
Importance of Cost Accounting
To be competitive in a global economy, companies must optimize material, labor and overhead costs. Cost accounting for a production process can help identify inefficient activities and improve productivity while also lowering cost.
Importance of Management Accounting
Management accounting is used for internal managerial decision making, project selection, budgeting, performance evaluation and strategy.
Both forms of accounting are equally important within organizations. Oftentimes managers with cost accounting experience understand processes thoroughly and bring significant insights into managerial decision making.