What is a cost accountant and what do they do?

Cost accounting is a form of management accounting and is used to understand the fixed and variable costs associated with producing and delivering the goods and services produced by an organisation.

Accountants in this field are specialists who determine the costs associated with providing a service or manufacturing a product by analysing expenses within the supply chain. They measure and record actual costs such as labour, shipping, production and administration, both across a function and at a unit level, to determine the true cost of bringing goods and services to market.

Cost accountants help to plan, budget and monitor performance, set standard unit costs and recommend appropriate cost-saving opportunities. The role is important in understanding where a company is spending money as well as which products, departments or services are most profitable.

Key responsibilities

Responsibilities will vary, but examples include:

  • Collecting and validating data to determine both fixed and variable costs of business activity such as rent, raw material purchases, inventory and labour
  • Analysing changes in product design, raw materials, manufacturing methods or services provided, to determine effects on cost
  • Analysing actual manufacturing costs and preparing periodic reports comparing standard costs to actual production costs
  • Recording cost information for use in controlling expenditures
  • Recommending cost-saving options
  • Performing ongoing reconciliations of various cost reports against software systems to ensure accuracy
  • Providing management with reports specifying and comparing factors affecting prices and profitability of products or services
  • Initiating the month-end closing and reporting processes, which they in turn submit to management
  • Performing physical inventory inspections and monitoring inventory management information systems

Why are they important?

Cost accountants play an important role in maintaining profitability and working capital by ensuring management have a clear understanding of their cost base. Part of their role is to make recommendations and identify opportunities to make the delivery of the organisation’s goods and services as cost-efficient and profitable as possible.

Skills needed for this role

A Cost Accountant must have excellent numeracy skills along with a logical and analytical mind. The ability to interpret and explain complex data is key with excellent communication and interpersonal skills

Strategic Professional Options examinations linked to this role

Advanced Financial Management

Advanced Performance Management

Career opportunities presented by this role

Cost accountants may work for accounting firms or directly for a company, and they are often found in the retail or manufacturing sectors. More experienced Cost accountants can work as consultants through their own independent practice. These consultants will often be called upon to perform services for small or mid-sized businesses that cannot afford a full-time cost accountant.

Competencies

High level competencies required include:

  • Data, digital and technology

    A. Identifies strategic options to add value, using data and technology.

    B. Analyses and evaluates data using appropriate technologies and tools.

    C. Applies technologies to visualise data clearly and effectively.

    D. Applies scepticism and ethical judgement to the use of data and data technology.

     

  • Financial management

    A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.

    B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.

    C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.

    D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.

    E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.

  • Management accounting

    A. Applies development and performance management, in the wider business and technological environment, within the context of strategic planning and implementation.

    B. Directs organisational performance through the selection and measurement of financial and non-financial performance indicators.

    C. Collaborates on the key tactical and organisational areas of budgeting and control, capital investments, people and resource management.

    D. Consults on the design and use of current and emerging technology and information systems to improve strategic decision-making and organisational performance.