What is Cost Accounting (2022)

What is Cost Accounting (1)

Cost accounting is a specific sub-field of accounting that involves managing an organization’s expenditures. Why would an individual pursue this particular type of accounting? A desire to drive decisions of an organization based on careful evaluation and analysis of all types of resources might lead a future accountant to consider a position in cost accounting.

With a number of different paths to follow in the accounting field and opportunities in diverse positions, a career as a cost accountant can be particularly rewarding and satisfying for financial professionals who are looking to make a difference in the success of an organization. In this article, our editors will lay out the details of what a career in cost accounting entails. This information will include job duties and responsibilities, education and training requirements, job outlook, and more.

What Does a Cost Accountant Do?

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Before pursuing any type of career, it’s important to learn about what a day in the life of a professional in the field looks like. The occupation of a cost accountant is no different. However, a cost accountant’s particular job responsibilities and tasks might be a bit harder to pin down than the average profession. That’s because a cost accountant completes a variety of functions within an organization, depending on their exact terms of employment. Some of these tasks may include:

  • Evaluating an organization’s existing budget and making recommendations for improvement
  • Collecting and analyzing the financial data associated with an organization, including overhead, expenses, and profits
  • Reconciling various accounts
  • Auding financial statements
  • Preparing and delivering financial presentations to upper management

While precise duties will vary, the general purpose of a cost accountant is to make recommendations and determinations that reduce an organization’s expenditures and limit financial loss. This requires the collection and analysis of different types of data, including results from the evaluation of time, labor, material, equipment, other resources, and pricing.

Cost accountants are often tasked with handling inventory, from daily or weekly counts to reconciling cyclical inventory assessments. Professionals in this area of accounting also evaluate the costs of all production, collecting and recording those results in order to resolve any differences and discrepancies. Reporting on the margins and determining costs of products, services, projects, equipment, and other expenditures ultimately aids an organization in making decisions related to finances.

How to Become a Cost Accountant: Academic Qualifications

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Most cost accountant positions require professionals to have earned a minimum of a bachelor’s degree in an accounting or finance field. In some cases, particularly for managerial or supervisory roles, candidates will be required to have a master’s degree. Some employers in the field prefer that prospective cost accountants have a Master of Business Administration or MBA credential with a formal specialization in accounting.

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About Bachelor’s in Accounting Programs

According to the National Center for Education Statistics (NCES), there are more than 400 public colleges and universities in the United States that offer bachelor’s degree programs in accounting. The Association to Advance Collegiate Schools of Business (AACSB) has accredited 179 of these programs. While these undergraduate degree programs in accounting can vary in terms of content and curriculum, there tends to be some standardization amongst degree plans. For instance, bachelor’s in accounting programs typically consist of approximately 120 credit hours of coursework, including both core and elective classes. We’ve listed some samples of both below.

Sample Core Courses in Accounting for Undergraduates

  • Managerial Accounting
  • Principles of Finance
  • Accounting Information Systems
  • Financial Statement Analysis
  • Auditing Principles

Sample Elective Classes in Accounting for Undergraduates

  • Advanced Tax Topics
  • Contemporary Issues in Accounting
  • Governmental and Not-for-Profit Accounting
  • Tax Research and Procedure

Top Bachelor’s Degree Programs in Accounting

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If you’re interested in becoming a cost accountant, you can start your journey towards a successful career in the field by enrolling in an accredited bachelor’s degree program. According to U.S. News & World Report, the following programs represent some of the best the nation has to offer for professional preparation in accountancy:

UTA offers both a Bachelor of Science (BS) in Accounting as well as a Bachelor of Business Administration (BBA) with a concentration in Accounting. Both programs are accredited by the Association to Advance Collegiate Schools of Business (AACSB).

BYU’s Bachelor of Science (BS) in Accounting is offered through the university’s distinguished Marriott School of Business. In addition to coursework, the program mandates extracurricular participation in accountancy as well as a professional internship.

The University of Illinois Urbana-Champaign’s undergraduate degree in accounting is offered through its Gies College of Business. The school also offers an accelerated dual degree program that enables students to earn their bachelor’s and master’s in accounting in just five years of study.

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The BSB in Accounting from Indiana University-Bloomington is a unique option offered through the university’s renowned Kelley School of Business. This program features a mostly-prescribed curriculum and is an excellent springboard for graduate studies in the field.

About Master’s in Accounting Degrees

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The most qualified cost accountants hold advanced credentials in the field, including master’s degrees in accounting. These high-level academic programs require an additional 60 credit hours of coursework beyond the bachelor’s degree and take roughly two years to complete. Like undergraduate degree programs in accounting, these graduate programs are unique to the colleges and universities that offer them. Typically, though, required courses will be similar in breadth and scope. Below, you will find some examples of course titles associated with real master’s degree programs in accounting.

Sample Master’s- Level Coursework in Accounting

  • Corporate Governance
  • Advanced Financial Accounting
  • Strategic Cost Management
  • Professional Responsibilities and Ethics in Accounting

Top Online Master’s Degree Programs in Accounting

U.S. News & World Report has ranked 67 colleges and universities throughout the country in terms of their online graduate degree programs in accountancy. Here are some of the highest-ranked master’s degree in accounting options:

UNC-Chapel Hill offers a fully online Master of Accountancy program through its highly regarded Kenan-Flagler Business School. This AACSB-accredited program requires a minimum of 36 credit hours of coursework and features four convenient start dates per year.

The Master of Science (MS) in Accounting from UT Dallas is available online and on campus. The curriculum for the program is interdisciplinary in nature and prepares students to sit for the CPA exam.

Penn State offers its online master’s in accounting via its World Campus. The program requires 30 credit hours of coursework and is entirely AACSB-accredited.

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The University of Connecticut is home to one of the more affordable online master’s in accountancy programs. This elective-rich offering is ideal for students with a desire to customize their course of study towards a particular degree path.

Professional Skills for Cost Accounting

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Academic training isn’t the only prerequisite for a successful career in cost accounting. In addition to courses that range from statistics to advanced financial management, professionals with an undergraduate or graduate degree in accounting must also develop the additional skills required for becoming a cost accountant. These include critical thinking, interpersonal skills, problem-solving, attention to detail and accuracy, analytical skills, research abilities, and communication skills. Graduates will also need experience working with a number of computer programs such as business management software including SAP and productivity software, particularly spreadsheet programs.

Professional Certifications for Cost Accountants

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To further prepare for a cost accountant role in any type of organization, future professionals might also consider completing one of a number of different certifications that can be helpful for securing a position as well as for advancing in a career. Helpful certifications include the Certified Public Accountant (CPA) and the Certified Management Accountant (CMA) designations. Additional information on professional certifications can be found at the website for the National Society of Accountants (NSA).

Career Opportunities and Job Outlook for Cost Accountants

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Cost accountants are valuable in all types of organizations throughout various industries, from automotive manufacturing to publishing and even education. A cost accounting professional might work for a government agency, educational institution, medical facility, or private corporation. Often, cost accountants specialize in one particular industry or product in order to most effectively make recommendations for financial decisions.

According to the Bureau of Labor Statistics (BLS), employment opportunities for accountants of all kinds, including cost accountants, are growing at a rate that is comparable to that of the average occupation. Specifically, the BLS projects a 7% increase for qualified accountants between the years spanning 2020 and 2030. This predicted growth will result in nearly a hundred thousand new jobs for accountants such as those skilled in cost accounting.

For those individuals looking to enter a career in finance, accounting is a wise choice right now. That’s because job opportunities for accountants are growing at a rate that’s significantly higher than that of other types of financial specialists. According to the BLS, the demand for accountants ebbs and flows along with the general health of the economy, but there are other influential factors as well. For instance, the continual globalization of the economy will create an uptick in the demand for cost accountants to help businesses and organizations allocate resources as they expand into new markets.

(Video) Cost Accounting, Material and Labor Variances

Some would-be cost accountants fear that increasing automation in the field will eventually replace the need for human resources in accountancy. According to the BLS, though, this concern is unfounded. Whatever jobs are eliminated due to technological advancements in the field will be quickly replaced by new positions for accountants needed to operate software and hardware applications.

A degree in the accounting field combined with the right skill set will help those individuals interested in the discipline enter into a position as a cost accountant. Professionals who are able to effectively apply this knowledge and expertise to cost accounting become integral parts of the overall success of an organization.

Frequently-Asked Questions About Cost Accounting

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If you’re looking for answers to questions about cost accounting, you’ve come to the right place. Below, our editors have curated a list of some of the most commonly asked questions about this area of academic study along with some general information. Be advised that inquiries about a specific school or academic program should be directed towards an admissions counselor or other school official.

Q: Can I earn a degree in accounting online?

A: Yes. Online degree programs in accounting are available at both the undergraduate and graduate levels. These academic options offered via distance education can be completed from the comfort of your home and are often just as rigorous and reputable as traditional on-campus programs.

Q: How long does it take to become a cost accountant?

A: The time investment required to become a cost accountant will vary depending on your chosen preparatory path as well as your pace of study. At a minimum, however, you can expect four years of study in an undergraduate program to earn the necessary qualifications. If you decide to get your master’s before entering the field, six years of total study will be required.

Q: What professional organizations exist in cost accounting?

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A: Here is a brief list of some of the most popular professional associations amongst cost accounting students and graduates:

  • National Society of Accountants (NSA)
  • American Accounting Association (AAA)
  • National Association of Black Accountants (NABA)
  • American Association of Finance & Accounting (AAFA)
  • Institute of Management Accountants (IMA)
  • American Institute of Certified Public Accountants (AIPA)

Q: How much will I make as a cost accountant?

A: PayScale reports the average salary for a cost accountant to be roughly $57,500 per year. Still, your exact wages may be higher or lower depending on a number of different factors such as your academic qualifications, professional certifications, geographical location, and more.

Sources:

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