What are the main methods of cost accounting?

The main methods of cost accounting include job order costing, process costing, and activity-based costing. Job order costing is used when products are manufactured based on specific customer orders, tracking costs per job or batch.

Process costing is applied in industries where products are mass-produced through a continuous process, such as chemicals or food manufacturing. It allocates costs to production processes or departments, providing average cost per unit.

Activity-based costing (ABC) assigns costs to specific activities or processes rather than products or services. This method provides a more accurate reflection of the cost incurred by each activity, helping in better cost management and pricing decisions.

Standard costing involves setting standard costs for products and comparing them to actual costs. Variances are analyzed to identify cost control issues and efficiency improvements. This method helps in budgeting and performance evaluation.

Direct costing focuses on variable costs associated with production, ignoring fixed costs. This method helps in analyzing the impact of production volume changes on profitability and making short-term decisions.