Difference between Costing and Cost Accounting

Costing and Cost Accounting are two different terms. The former is a method of assessing the cost of goods produced and services rendered at different stages of the production process. However, the latter is an accounting system that refers to analyzing and recording the costs involved in the production of any product.

What is Costing?

The actual or estimated amount of expenses incurred or to be incurred on a particular product or service is known as cost. The method of assessing the cost of goods produced and services rendered at different stages of the production process is called Costing. The technique or process of estimating input costs at each stage of the manufacturing process is known as costing. There are different methods which are used by companies to determine the cost of products and services. 

What is Cost Accounting?

Cost Accounting is an accounting system that refers to analyzing and recording the costs involved in the production of any product. 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.

Determining the cost of production and controlling the cost is the main objective of Cost Accounting. Estimating the costs considers the various aspects to make the analysis as accurate as possible because managing the funds properly is the most crucial part of a company. 

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.

Difference between Costing and Cost Accounting 

Basis	Costing	Cost Accounting
Meaning	The method of assessing the cost of goods produced and services rendered at different stages of the production process is called Costing.	Cost Accounting is an accounting system that refers to analyzing and recording the costs involved in the production of any product.
Scope	The scope of costing is narrow as it contains different approaches that underlie the overall cost accounting system.	The scope of cost accounting is wide as it is not confined to costing procedures but includes also cost-related information, periodic statements, reports, and cost checking and monitoring.
Nature	Costing is a process and technique of determining costs.	Cost Accounting is a specialized branch of accounting.
Accounting principles	Accounting principles are not applied in the case of costing.	Accounting principles are applied in the case of cost accounting.
Reliability	As costing estimates are based on scientific reasoning techniques and actual statistics from the past, it is reliable.	As cost accounting is dependent upon estimates, it is not very reliable.
Usage	It is not used by management for decision-making as it is used for classifying and recording expenses incurred over a period of time.	It is used by management for decision-making regarding cost control and costs and selling price determination.