Explain the purpose of cost accounting and why it is important for managers to have cost information?

The purpose of cost accounting is to ascertain the cost of the designated cost centres and cost units. Cost is the expenditure on goods and services required to carry out the operations of an organization.

A cost unit is ‘a unit of production for which the management of an organization wishes to collect the costs’ and a cost centre is the area of an organization for which costs are collected for the purpose of cost ascertainment, planning, decision making and control.

Business is about money andin order to run a business successfully, managers need to know the cost of runningthe business in order to run it successfully.