When you start a business or create a new product, one of the most important questions an entrepreneur will ask is “how do I make a profit?” The simple answer is, of course, “all the traffic will bear.” That will make a profit, but it will limit the possibilities. This is where the cost accountant comes in.
A cost accountant‘s job is to know the cost of each piece of material in a product and the cost of assembling the product. Through research and projections, the cost accountant looks at the aspects of the product production and factors it into the price. The price also has to include the cost of current and future research and development, because the company could make a profit on each item and go bankrupt if the cost of creating the product was not added into the cost.
Many of us have the image of green eye-shades and pocket protectors when we think about accountants. Today there is a greater chance of carpel tunnel than a lead smudge. Computers are the driving force in the world today; the knowledge stored and computational abilities have made it possible to refine cost accounting to unheard of preciseness.
What is a Cost Accountant?
A cost accountant is the person who helps to determine the cost associated with various business creations and expenses. Whether the expense is a lunch or an automobile, a business must know what it will cost to produce the item. A dollar hamburger, for example, has to be looked at from the cost of the bun and the beef to the cost of the squirts of ketchup and mustard, as well as the personnel who put it together and cleaned up afterwards.
A cost accountant is also used during the hiring process to determine the potential value of hiring new employees. Too many salaried workers will cause the profits to go down. That means the distribution or production process is impeded.
The educational requirements for anyone who wants to become a cost accountant are fairly simple. Any individual that wants to become a cost accountant should acquire a bachelor’s degree in finance or accounting.
An advanced degree can be extremely helpful to establishing a career as a cost accountant. Acquiring a master’s degree in business administration and learning the technical aspects of the area you wish to work on can give a person an edge. Educationally and professionally, a degree will help him, or her, succeed in a very competitive accounting field.
Techniques of the Industry
It is one thing to know the numbers; it is quite another to know how the numbers work in real day-to-day life. A person can flip hundreds of burgers in an hour, but how much time does it take to transfer it to the bun (is the bun also going on the grill) and put on the lettuce and tomatoes. If your requirement for success is $60 an hour, can the average person have the stamina and focus to put out a consistent product? That is just for a burger—now imagine the intricacies of an automobile with thousands of pieces that interlock perfectly. What about testing? These are questions that the cost accountant must know.
Special Certifications Needed
This will vary from company to company. Being a certified accountant is always more desirable to the employer. Being familiar with the product and its creation can be demonstrated through work experience and can be helpful in landing a job, because the cost accountant will be expected to know whether a product can be made at a specific price point.
“It’s not rocket science”, is a popular catch phrase and this is not rocket science because, depending on the product, it can be even more complicated. A person who wishes to enter this field will focus on detail and concentration. It can be a lucrative field, and some have started as accountants and ended up as president or chairman of a company. The result of hard work can be well rewarded in this field.