Costing is the techniques and processes of ascertaining costs. These techniques consist of principles and
rules which govern the procedure of ascertaining cost of products or services. The techniques to be followed
for the analysis of expenses and the processes of different products or services differ from industry to
The main object of costing is the analysis of financial records, so as to subdivide expenditure and to allocate
it carefully to selected cost centers, and hence to build up a total cost for the departments, processes or jobs
or contracts of the undertaking.
Cost accounting may be regarded as “a specialised branch of accounting which involves classification,
accumulation, assignment and control of costs.
The Costing terminology of C.I.M.A. London defines cost accounting as
“The establishment of budgets, standard costs and actual costs of operations, processes, activities or
products, and the analysis of variances, profitability or the social use of funds”.
`Wheldon defines cost accounting as “classifying, recording and appropriate allocation of expenditure for
determination of costs of products or services and for the presentation of suitably arranged data for purposes
of control and guidance of management”. It is thus, a formal mechanism means of which costs of products
or services are ascertained and controlled.
Cost accounting is different from costing in the sense that the former provides only the basis and information
for ascertainment of costs. Once the information is made available, costing can be carried out arithmetically
means of memorandum statements or method of integral accounting.
Cost Accountancy has been defined as “the application of costing and cost accounting principles, methods
and techniques to the science, art and practice of cost control and the ascertainment of profitability. It
includes the presentation of information derived there from for the purpose of managerial decision making”.