Difference between Cost Accounting and Management Accounting

Cost Accounting and Management Accounting are two distinct fields of accounting, both of which serve different purposes in a business. 

Cost Accounting

An accounting system that helps in analysing and recording the costs involved in the production of any product is known as Cost Accounting. It revolves around cost computation, cost control, and cost reduction. It is an accounting method for ensuring cost-effectiveness by accumulating, organising, recording, calculating, analysing, and assessing the overall expenses incurred on a product, process, or project, etc. It is mostly used in industrial units or factories where the goods are manufactured.

The main objective of cost accounting is to determine the cost of production and control the cost. As the management of funds is the most essential part of a company, cost estimation through cost accounting helps in making the analysis as accurate as possible.

Generally, there are two types of costs considered in Cost Accounting.

• Fixed Cost: It refers to the cost of the company which does not change regularly like the rents, fixed salary of employees, taxes, insurance, etc.
• Variable Cost: It refers to the cost of a company which can be changed at any instant. For example, if the cost of any raw product increases it directly affects the price of the main product.

Management Accounting

An accounting system that helps in collecting, analysing, and understanding financial, qualitative, and statistical information ultimately helping the management in making effective decisions regarding the business is known as Management Accounting. It is also known as Managerial Accounting. In simple terms, it is concerned with providing information to the management of a company to assist them in making decisions. 

Management accounting uses financial data to generate reports that are tailored to the needs of specific managers and departments within an organisation. These reports can include budget forecasts, cost analysis, variance analysis, etc.

Even though management accounting is different than cost accounting and financial accounting, it takes information from both to produce periodical reports for the management. Besides, cost accounting is a subset of management accounting.

Difference between Cost Accounting and Management Accounting

Basis	Cost Accounting	Management Accounting
Meaning	An accounting system that helps in analysing and recording the costs involved in the production of any product.	An accounting system that helps in collecting, analysing, and understanding the financial, qualitative, and statistical information ultimately helping the management in making effective decisions regarding the business.
Application	It helps a business prevent it from incurring costs beyond its budget.	It helps a business by offering it a big picture of how it should strategize.
Objective	Its objective is to ascertain the cost of production.	Its objective is to provide information to the managers so they can set goals and forecast strategies.
Dependence	For successful implementation, cost accounting does not depend on management accounting.	For successful implementation, management accounting depends on cost accounting as well as financial accounting.
Users	Cost accounting is used by the vendors, shareholders, and management of an organisation.	Management accounting is used only by the management of an organisation.
Statutory Requirement	Big business houses need to perform a statutory audit of cost accounting.	There is no statutory requirement for the audit of management accounting.
Scope	The scope of cost accounting is narrower.	The scope of management accounting is broader.
Specific Procedure	There is a specific procedure under cost accounting.	There is no specific procedure under management accounting.
Basis of Decision-making	Historical information is used as the basis of decision-making.	Historical and estimated (predictive) information is used as the basis of decision-making.
Data Recorded	Cost accounting records past as well as present data.	Management accounting focuses more on analysing future projections.