Cost Accounting

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This a paper that explains the various aspects of cost accounting. This paper also the explains the difference types of cost involved in a productioning and running of a business enterprise

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running head: COST ACCOUNTING1COST ACCOUNTINGName:Course:Date:COST ACCOUNTING2Question OneDetailed definitions of operating expenses and production costsProduction costs are costs that emanate directly from production activities. Such costsinclude labour costs and material costs. On the other hand, operational costs are costs thatemanate from non production activities and rather are from the operating activities of theorganization. In this regard, operating costs include electricity costs, administration costs anddepreciation among other key operating costs.The distinguishing of these different cost categories is important to an organization asit dictates the evaluation of the profitability of the various products under production. Thedifferentiation of costs is important towards the allocation of production costs and sellingprice to each product as per their actual cost whereas the operating expenses are appropriatedaccording to production units. Thus, the organization is able to sufficiently allocate costs tovarious organizational activities accurately.The allocation of costs to various products is key towards the marketing and pricingof each of the products. As the management may suffer losses due to poor pricing of productsas a result of wrongful allocation of csots.COST ACCOUNTING3Question twoAllocation of costsDirect cost is that cost which can be identified for the production of somespecified products. The best example of direct
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