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CMA Intermediate · Cost Accounting · Introduction to Cost Accounting

Which of the following best states the relationship between cost accounting and cost control?

Cost control involves setting standards or targets and comparing actual costs with them, relying on information that cost accounting supplies. It is not the same as cost reduction, which aims at lasting lower unit cost, nor mere ascertainment after year end.

  1. ACost control means fixing standards and comparing actual costs to them, using information that cost accounting providesCorrect
  2. BCost control means permanently lowering cost per unit without regard to quality
  3. CCost control is the same as cost ascertainment and needs no comparison
  4. DCost control is possible only after the financial year has closed

Explanation

Cost control is regulating costs against targets or standards, and it relies on cost accounting data and variance reporting. Permanent reduction irrespective of quality describes cost reduction. It is not mere ascertainment, and it is exercised during the period, not only after closing.

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