Financial Education - Importance of cost accounting and manufacturing companies

Today I will talk about expenditures. Conceptually, they are cash outlays, because of this, researchers consider that costs are expenditures incurred by entities to manufacture a certain good or service and thus obtain income at a specific time.

Costs, according to the technical tax dictionary, are "the totality of all the expenditures necessary to produce a good", which indicates that the elements that are part of the production of a good or service must be included; they are not reflected in the financial statements. Even so, knowing them together with their main sources and their elements is an imperative hierarchy for companies.

In relation to the needs that come from the economic activities generate the creation and development of financial information systems, this in order to be able to make decisions in case of any deviation or distortion on the way, one of these is the cost structure.

It is a set of proportions that arise from the total of the activity, which in turn represents each type of cost, detaching from these the fixed and variable costs of the different classifications.

Therefore, cost accounting acquires importance for manufacturing companies, since it provides the steps to follow to determine production costs, which are essential for the administrative control of the entities.