Importance of Costing Methods in Accounting Theory (Accounting) in Academic Curriculum
In the present scenario of competition among companies, it is vital that the costs of the company be reduced in order to bring about overall profit, by reducing expenses. Costing methods play a vital role in calculating the vital costs incurred by the company/concern. Costing methods bring out various techniques by which the expenses of a company in terms of the cost to the company, such as employees' salaries, equipment purchase and other such liabilities in forms of purchases are managed to cut down on costs. Not only the cost of products are involved, but also the costs involved in intangibles such as services or any operation involving expenditure may also be considered as cost to the company. It is vital that students know about the costing methods to calculate and decipher whether the expenses of the company are within limits of its income, so as to obtain a significant margin of profit.
Difficulties faced by student while solving Costing Methods in Accounting Theory (Accounting) problems
The various methodologies involved in calculating the costs of the company may be confusing for the students, who may not know as to the ultimate expenditure or expenses of the company, to have a clear picture of which categories go under expenditure and which are classified as reinvestment. To clarify this position of costing methods, it is inevitable that students are provided with help so that they could be detailed on the concepts of direct and indirect expenses, which have an impact on costing.
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