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How cost audit is useful for management?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 rakkesh asked over 2 years ago

Hi, How is cost audit useful to management/Directors?

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3 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered about 2 years ago

Cost audit provides reliable cost data for managerial decisions. Cost audit helps management to regulate production. Cost audit acts as an effective managerial tool for the detection of errors, frauds and irregularities so that reliable and smooth functioning of the system is continued. Cost audit reduces the cost of production through plugging loopholes relating to wastage of material, labor and overheads.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Pushkala Santhanam answered over 2 years ago

Benefits of Cost Audit to Management - 1. To aid the management to regulate production. 2. To enable the management to choose economic methods of operations and thus earn profits to satisfy shareholders and the investing public. 3. To enable the management to reduce the working costs by avoiding wastes. 4. To enable the management to chalk out the future policy on the basis of the report by the cost auditor especially in regard to labour, raw material, plant, etc. to maximize production and reduce the cost of production. 5. Cost analysis furnishes useful information in respect of such important matters, such as gross margin, differential costs, etc. 6. To fix the price where tenders or quotations have to be sent, especially in times of competition.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered over 2 years ago

Advantages Of Cost Audit To The Management ------------------------------------------ 1. Cost audit provides reliable cost data for managerial decisions. 2. Cost audit helps management to regulate production. 3. Cost audit acts as an effective managerial tool for the detection of errors, frauds and irregularities so that reliable and smooth functioning of the system is continued. 4. Cost audit reduces the cost of production through plugging loopholes relating to wastage of material, labor and overheads. 5. Cost audit can fix the responsibility of an individual wherever irregularities or wastage are found. 6. Cost audit improves efficiency of the organization as a whole and costing system in particular by constant review, revision and checking or routine procedures and methods. 7. Cost audit helps in comparing actual results with budgeted results and points out the areas where management action is more needed. 8. Cost audit also enables comparison among different units of the factory in order to find out the profitability of the different units. 9. Cost audit exercises moral influence on employees which keeps them efficient and alert. 10. Cost audit ensures that the cost accounts have been maintained in accordance with the principles of costing employed in the industry concerned.

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