Cost Management Facilitates in Achieving Business Results

Cost management plays an important role in framing the best policies and selecting the best operation for the success of business in modern times. It is said that cost accounts are the key to economy in manufacture and are essential for the intelligent and cost-effective management of a factory.

Managers need lots of information for taking some important decisions towards future plans of a business and cost management provides such information. Management and policy making of a big business are possible only on the basic of information and data which is easily provided by cost management franchises. Many businessmen do accept the importance of cost management but say "cost accounting is definitely useful for someone but my business is different." Cost accounts are considered necessary for the efficient management of all the businesses. Information or inferences which are not given by financial accounts can easily be available by cost accounting. Thus cost management is an essential part of a sound business management.

Cost accounting is the basis of managerial decision-making. These accounts provide guidance to managers. These give a pre- indication of possible hardships and provide guidance to overcome the difficulties successfully. In the absence of cost accounting many industries have been found winding up their existence. Managers of the business enjoy many advantages if they use cost accounting some important ones are given below:

Control over Material: By cost accounting the purchase, storage and use of material can be controlled so as to minimize cost of materials as far as possible.

Control over Labor: Selection of workers, their training, working conditions and wages can be controlled so as to increase their efficiency and thus, more production can be had from less expenditure on labor.

Control over indirect expenses: There are so many expenses occurring in the organization which are not directly related to the production. Cost management exposes such expenses and help to keep in control.

Decision about purchasing a new plant: By comparing the relative profitability with the help of cost management, it can be decided whether to establish new plant or to continue with old one.

Helps in making other decisions about selling: Management has to take several decisions related to the sale of production. Which item should be produced in more quantity and which in less quantity? Which market should be paid more attention to and which is less? A cost management franchise makes it easier to take such decisions efficiently and easily.