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First of all Cost Accountant is the profeesional who plays a vital role in monitoring & controlling the cost, improving the productivity and efficiency of the business processes on continious basis unlike the chartered accountant who does post morton operation after the closure of accounting period. Despite this the Cost Accountants are not treated on par with CAs. But there are some business organisation does understand the importance of Cost Accountant's role.
Now coming to the point of controlling cost, the following points are important
1. Cost Accountant should first understand the nature of business , process of production, the technical aspects of production process etc.
2. He should thoroughly study and understand the inputs of material & labour required in the production process.
3. Most importantly he should understand if it is manufacturing concern whether the products are produced either to the order or to the stock . This will help him to assess the cpacaity utilistion
Once the above points are taken care, Cost Accountant can control the cost as given follow
1. Material & Labour Cost can be controlled by comparing actuals with standrads . The standards can be set for material usasge , material rate, labour hours for production at the time of preparation of revenue budgets . The actuals are compared with standards to identify deviations & suggest the corrections Material Variance & Labour Variance reports will help in monitoring & controlling these costs.
2. The material , labour & overheads can be controlled by setting up production process wastage norms each processwise & monitoring the same to keep them in check
3. Overhead cost can also be controlled through identifying & eliminatng unwanted or non value added activities or expenses. In case of manufacturing process the overheads per unit of products can be reduced by achieving maximum capacity utilisation Overhead Variance reports will also help in controlling the overhead costs
