Updated July 21, 2023
What is Cost Accounting Career?
The term “cost accounting” refers to the branch of management accounting that is specialized in analyzing the costs incurred by the company during the manufacturing of the products or sale of the same.
It is the method of accounting that is used to assess the mix of fixed and variable costs in the overall cost of production or manufacturing, which is eventually used to determine the break-even point beyond which any incremental earning results in profit.
In fact, the whole procedure of computing the break-even point for understanding the profit level is known as cost-volume-profit analysis, which is one of the major features of the field of cost accounting. In this article, we will discuss the functions, education & skillset requirements, and average salary of some of the major roles in the field of cost accounting.
Explanation
It is to be noted that the functions of a cost accounting personnel varies based on the type of company or the level at which one works within the company. One may be working as a cost accountant in a government organization or a large multinational company or as a consultant in a public accounting firm or as an independent consultant. In each of these organizational set-ups, a cost accounting professional is required to perform a wide variety of functions.
On the other hand, most of the companies set a certain minimum level of the educational requirement for recruiting candidates for the position of cost accountant and in most of cases this minimum level of education is of a bachelor’s degree in the field of accounting or statistics or finance. However, just meeting the minimum educational qualification requirement doesn’t suffice and one needs to acquire other skill set to achieve a successful career in cost accounting.
Different Levels for a Cost Accounting Career
Now we will look at some of the functions, education & skillset requirements and average salary of a cost accounting personnel at different levels (entry, mid and senior-level) within a company:
1. Entry Level
An entry-level position refers to the designations for which usually a candidate requires less than 3 years of prior experience in the given field or profession. In other words, such positions are specially designed for recent graduates who are supposed to work at the lowest level within the organization.
Role: At this level, the likely role primarily includes Cost Accountant.
Functions: The functions of a cost accounting personnel at this level includes:
- Working under the guidance of a senior accountant.
- Analyzing the company’s financial status and preparing reports for the management.
- Maintaining and reconciling all company accounts.
Education & Skill Set Requirement: The educational and skill requirement of a cost accounting personnel at this level includes:
- At least a bachelor’s degree in accounting or finance or other related fields
- Hands-on experience of working on MS Office and other business-related software
Expected Salary: At this level, a cost accountant can earn around $41,625 annually in a mid-sized company, which can go up to $43,570 annually in a large multi-national corporation.
2. Mid Level
A mid-level position refers to the designations for which usually a candidate requires 3-15 years of prior experience in the given field or profession. In other words, such positions are designed for professionals who have experience in handling teams and are supposed to work just below the executive level in the organization.
Role: At this level, the likely roles include Internal Auditing Managers, Budget Directors, and Accounting Managers.
Functions: The functions of a cost accounting personnel at this level includes:
- Collecting and analyzing the company’s operational expenses
- Overseeing the work of the junior accounting team
- Advising the management of various improvement measures for reducing costs
Education & Skill Set Requirement: The educational and skill requirement of a cost accounting personnel at this level includes:
- Should Meet All Entry-Level Requirements.
- A Master’s degree (eg: MBA) is preferable and it attracts higher salaries along with a better scope.
- Sound knowledge of financial analysis and good communication skills.
Expected Salary: At this level, cost accounting personnel can earn around $73,375 annually in a mid-sized company, which can go up to $84,375 annually in a large company.
3. Senior Level
A senior-level position refers to the designations for which usually a candidate requires more than 15 years of prior experience in the given field or profession. In other words, such positions are designed for professionals who have experience of heading departments and are supposed to work at the highest level within the organization.
Role: At this level, the likely roles include Treasurer, Controller, and Chief Financial Officer (CFO).
Functions: The functions of a cost accounting personnel at this level includes:
- Overseeing all the financial activities within the company
- Preparing all high-level reports and presenting them to the company’s top management
- Recruiting, training, and supervising the junior accounting team
- Employing various cost-cutting measures with the intention of building operational efficiency
Education & Skill Set Requirement: The educational and skill requirement of a cost accounting personnel at this level includes:
- Should meet all mid-level requirements.
- A master’s degree in accounting or finance or other related fields is a must.
- Sound management as well as organizational skills.
- Strong understanding of corporate finance.
Recommended Courses for Cost Accounting Career
Although the minimum educational qualification mentioned in the above section is good enough to offer you a decent job, in case one wants to improve one’s market value as a cost accountant, then a certification course in the field of accounting or finance is a must. So, let us now discuss some of the major certification courses that are considered to be very valuable (not mandatory) to help one excel in the field of cost accounting.
- Certified Public Accountant (CPA): According to rules stated by the government, CPAs are the only professionals with the authority of signing tax returns, writing audit reports, and providing opinions on the financials for publicly traded companies.
- Chartered Financial Analyst (CFA): The CFA designation indicates that the charter holder has strong knowledge about the financial market and the available investment options. So, CFA charter holders are likely to become excellent CFOs and controllers.
- Certified Management Accountant (CMA): The CMA certification is a specially designed course for professionals functioning at the executive level (such as COO or CFO) of a company or working with them.
Conclusion
So, it can be concluded that a cost accounting career has the potential to offer growth both within a company or across companies. However, the contour of the growth or the career path depends a lot on educational qualifications, certifications, and specialization. Nevertheless, the cost accounting career is undoubtedly a very prolific career path that not only allows one to build one’s own professional career but also helps one shape the future of a company.
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