What are the most important cost accounting reports to generate?

1 Cost of Goods Sold Report

The cost of goods sold (COGS) report shows the direct costs of producing or purchasing the goods or services that a business sells. It includes the costs of materials, labor, and overhead that are directly related to the production or acquisition process. The COGS report helps you calculate your gross profit, which is the difference between your sales revenue and your COGS. By analyzing your COGS report, you can identify the factors that affect your production costs, such as the prices of raw materials, the efficiency of labor, and the allocation of overhead. You can also compare your COGS with industry benchmarks and competitors to evaluate your cost competitiveness and profitability.

2 Cost Center Report

A cost center is a department, function, or activity within a business that incurs costs but does not generate revenue directly. Examples of cost centers are research and development, marketing, administration, and customer service. A cost center report shows the budgeted and actual costs of each cost center and the variance between them. The cost center report helps you monitor and control the costs of each cost center and ensure that they are aligned with your strategic objectives. You can also use the cost center report to evaluate the performance and efficiency of each cost center and identify areas for improvement or optimization.

3 Job Costing Report

Job costing is a method of cost accounting that assigns costs to specific jobs, projects, or contracts that a business performs for its customers. Each job is unique and has different requirements, specifications, and deliverables. A job costing report shows the costs of materials, labor, and overhead that are allocated to each job and the revenue that is generated from each job. The job costing report helps you track and manage the costs and profitability of each job and ensure that they meet the customer's expectations and contractual terms. You can also use the job costing report to estimate and quote future jobs and set appropriate prices and margins.

4 Process Costing Report

Process costing is a method of cost accounting that assigns costs to homogeneous units of output that are produced in a continuous or mass production process. Examples of businesses that use process costing are oil refineries, chemical plants, and food manufacturers. A process costing report shows the costs of materials, labor, and overhead that are incurred in each stage or process of production and the output that is produced in each stage or process. The process costing report helps you measure and control the costs and efficiency of each process and ensure that they meet the quality and quantity standards. You can also use the process costing report to calculate the unit cost of each output and compare it with the market price and demand.

5 Activity-Based Costing Report

Activity-based costing (ABC) is a method of cost accounting that assigns costs to activities that consume resources and then to products or services that use those activities. Activities are the actions or tasks that a business performs to produce or deliver its products or services. Examples of activities are ordering materials, setting up machines, inspecting products, and invoicing customers. An activity-based costing report shows the costs of each activity and the products or services that use those activities. The activity-based costing report helps you identify the drivers and beneficiaries of costs and allocate them more accurately and fairly. You can also use the activity-based costing report to analyze the value and profitability of each activity, product, or service and eliminate or reduce the non-value-added or low-value-added ones.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?