Disadvantage of Cost Accounting

Cost Accounting is not a logical and scientific branch of accounting as compared to the other branches. Cost accounting lacks a uniform procedure that can be applied to the businesses of the all industries. There are a number of limitations of cost accounting that can be described as under:-

  • Cost accounting system is more complex as compared to the other accounting systems. Cost accounting needs to identify different types of expenses and require a lot of research to collect data and resources that makes it even more complex
  • The cost accounting system is more costly and expensive as compared to the other accounting systems. Additional costs are required for the installation of overheads and managing them in a proper way.
  • In cost accounting system accountants cannot estimate the price of the assts on their current values.
  • Cost accounting systems can be implemented to large and complex system and not suited for small unit business
  •  It cannot bring out the actual cost of the product as it uses estimated cost or notion cost for calculations
  • Cost accounting fails to take in the social obligations of the business so social accounting is completely out of scope of cost accounting
  • The cost accounting relies on financial statement for the accuracy and calculation of the data
  • In most of the cases cost accounting is based on estimation and the previously collected data
  • Cost Accounting cannot control cost by itself
  • With the help of the cost accounting we cannot find out the tax liabilities of the company

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