Cost accounting is used as a tool to assist managers and secretarial staffs of a company to quantify the costs and different aspects of running a business successfully. It is a practice of following, tabulating and studying of costs related to the transactions of a company.

Cost accounting was developed at some stage in the Industrial revolution in the Europe. The necessity to run successfully a large scale business organization was the key to develop a substantial system by which business proprietors and his secretarial along with managerial staffs can correct the diversions and take proper decisions.

Cost accounting are also describes as a sort of management accounting that interprets the supply chain (from the very first stage of preparing a product up to its marketing and distribution) into financial values. Managers make use of cost accounting to boost the decision making and thus reducing the expenditures of a company and improve its revenue. By principle, costs are quantified by the units of currency of the concerned country.

Basic cost accounting has four hands. These are Standardized Cost Accounting; Activity based Costing, Throughout accounting and Marginal costing.

Among these, SCA or the Standardized Cost Accounting which was the predecessor among cost accounting is practically become obsolete at present. These are due to many factors. The main reason is ‘pat rate’. Unlike older times, workers are now paid on an hourly rate. This has reduced the cost of manpower a lot. Other reasons are companies prefer to incur relatively low true variable cost and high fixed costs, the machineries become more sophisticated and are costing much more than the earlier times, lastly alteration in the level of full cost register generates swings that are really tricky to speculate and understand.

So, the SCA has changed to a newer concept of FCA (Full Cost Accounting). The rest of the hands are working properly.