What are the cost accounting different approaches?

Different cost accounting techniques are used in different industries to analyze and present costs for the purposes of control and managerial decisions. The generally-used types of costing are as follows:

1.Marginal costing: Marginal costing entails the allocation of only variable costs, i.e. direct materials, direct labour and other direct expenses, and variable overheads to the production. It does not take into account the fixed cost of production. This type of costing emphasizes the distinction between fixed and variable costs.

2.Absorption costing: In absorption costing, the full costs (that is, both fixed and variable costs) are absorbed into production.

3.Standard costing: In standard costing, a cost is predicted in advance of production, based on predetermined standards under a given set of operating conditions. Standard costs are compared with actual costs periodically, and revised to avoid losses due to outdated costing.

4.Historical costing: Historical costing, unlike standard costing, uses actual costs, determined after they have been incurred. Almost all organizations use the historical costing system of accounting for costs.