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Cost Accounting:

A Really Short Course in

Manufacturing Productivity

ost accounting” sounds a little redundant, doesn’t it?
“CAfter all, isn’t all “accounting” about “cost”? Well, yes
and no. To folks in the business of accounting and those most
familiar with accounting practices, cost accounting is that spe-
cial branch of the field that deals exclusively with the cost of
making or buying a product or service that the company then
sells to its customers. Costs that are in the purview of the cost
accounting specialists (known affectionately as “cost account-
ants”) are all those costs on the income statement between the
revenue line and the gross profit line, referred to in Chapter 4 as
cost of sales.
While this area is considerably more complex in a company
that conducts manufacturing operations, every company—man-
ufacturing, distribution, retail, or service—needs to understand
and manage its gross profit. Remember: gross profit pays for all
the other costs of running the company, as well as providing a
net profit to the owners. If gross profit isn’t managed well, it’s
very difficult for other segments of the company to make up the

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