Cost type, cost center, and cost object accounting are essential components of internal accounting, serving the detailed analysis and control of costs within a company. Together, they form the cost accounting system, which helps companies understand and manage their cost structure more effectively.
Cost Type Accounting: This accounting method captures what types of costs are incurred within a company. It categorizes costs by their nature, such as material costs, labor costs, depreciation, etc. The goal is to obtain a complete and structured overview of all costs incurred within the company.
Cost Center Accounting: This accounting method analyzes where the costs are incurred within the company. The company is divided into various cost centers, such as departments or production areas. This allows for a detailed allocation of costs to individual responsibility areas and helps monitor the efficiency and economic performance of the various sections.
Cost Object Accounting: This accounting method determines what the costs are incurred for, i.e., which products or services have caused the costs. It allocates the costs recorded in cost type and cost center accounting to individual cost objects. This enables precise calculation of the costs and prices of different products or services.