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What does a Cost Accountant do?

Cassie L. Damewood
Cassie L. Damewood

A cost accountant observes and analyzes the costs. associated with doing business. These costs can be tangible or intangible and cover everything from the cost of the office lease to inventory and labor expenditures. A person in this position is responsible for determining which costs can be reduced or eliminated and how to implement the savings without compromising the quality of daily operations or customer service.

The analysis process of a cost accountant is fairly constant regardless of the industry in which he works. The cost accounting software used can be generic, industry specific or created in-house for the specific company. The software program normally consists of a database of costs, both fixed and variable. It usually includes basic features to track changes and project fluctuations in expenditures and assets.

A cost accountant analyzes a business' operating expenses.
A cost accountant analyzes a business' operating expenses.

Armed with these software parameters, a cost accountant delves into details on material, manufacturing and labor costs. He includes analyses of costs versus profitability in all areas of operation. The finer points of his research may include utility costs, real property and equipment values, tax issues and variations in profit margins. Reports reflecting his findings are generally supplied to management.

A cost accountant may analyze both tangible and intangible costs.
A cost accountant may analyze both tangible and intangible costs.

Cost accountants may find standard systems for analysis insufficient, as their capabilities are often limited. In this case, the accountant may create his own database and create checks and balances tailored to the research at hand. He is most effective in his job when the data accumulation and analysis system is streamlined to meet his diagnostic needs. Customized software systems also facilitate the creation of reports for management that pinpoint critical areas of concern.

Accurate costing information is vital to the stability and growth of any company. A good cost accountant must have a clearly defined view of the company as a whole, as well as the ability to recognize and address minute details that affect profit and loss. This involves applying highly-developed skills in margin analysis and project costing. A software system tailored to meet specific company needs helps him provide the most precise and helpful information to management.

A cost accountant's work doesn't only involve computer work—he may also be involved in activities to support his goals. These can include conducting physical inventories or cycle counts in departments, ranging from raw material procurement to office supplies. He may also interface with other departments to keep apprised of their concerns and comments and apply them to his cumulative cost accounting conclusions.

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Discussion Comments


@indigomoth - It can be a really fun and satisfying job with the right company. I think from what you were saying, you'd be better off working with a smaller company, where you could be in sole charge of the cost accounting system.

Alternatively, in larger companies there is often a small team of cost accountants, who compile data together from different areas to show the overall trends.

Some team members might just collect data, for example by counting stock, and others might analyze it for the problems and solutions you were talking about.

Usually they will have plenty of access to channels where they can make suggestions for running the company more cost effectively.


I think this would be a fascinating job with the right company.

It would be extremely frustrating to me if I could see problems with the way they were conducting business, but wasn't given the leeway to propose solutions.

If they wanted my input (they wouldn't always have to take my recommendations of course) and allowed me to have some say in matters, I would be so much more enthusiastic about the work.

But if I was merely writing down the day to day workings of the company, it wouldn't be very satisfying and would just feel like a glorified bookkeeping job.

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    • A cost accountant analyzes a business' operating expenses.
      By: mim
      A cost accountant analyzes a business' operating expenses.
    • A cost accountant may analyze both tangible and intangible costs.
      By: pfpgroup
      A cost accountant may analyze both tangible and intangible costs.