There are various ways to classify cost accounting, but one common method is to divide it into four types:
Product cost accounting: This type of cost accounting is used to determine the cost of producing a product, including direct materials, direct labor, and manufacturing overhead. This information is used to set prices and make decisions about production levels.
Process cost accounting: This type of cost accounting is used in industries where products are produced in a continuous process, such as chemical or oil refining. It involves averaging the cost of production over a period of time, rather than allocating costs to individual units of production.
Job order cost accounting: This type of cost accounting is used in industries where products are made to order, rather than being mass-produced. It involves allocating costs to individual jobs or projects, rather than averaging them over time.