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Cost accountants track and manage business costs, including organizations' expenses, budgets, and supply chains. While most other accountants work with information for external use, cost accountants specialize in internal use information. These professionals collaborate with management and financial teams to improve business decisions and financial plans.
Cost accountants may work full time in large organizations with complex costing requirements, whereas smaller organizations hire them part time or as contracted consultants. These accountants typically need at least a bachelor's degree, though master's degrees and certifications can provide cost accountants with additional job opportunities, including advanced roles.
Rising business costs and supply chain challenges have placed greater importance on cost accountants' responsibilities. According to the Council of Supply Chain Management Professionals State of Logistics Report, business logistics costs alone rose 22.4% in 2021. Discover more about the cost accounting profession below, including job requirements and career possibilities.
Cost Accountant Duties
A cost accountant supports business decisions by analyzing data and providing managers with insightful costing information. They manage expenditures and look for cost-efficient solutions to inefficiency problems.
Cost accountants typically work with cost accounting systems and develop expense, budget, and supply chain reports for management. These professionals also forecast cost-related changes and risks. Other duties include:
- Costs vs. Profits: Cost accountants measure fixed and variable costs to determine profit margins. This information can be used for several purposes, including revenue and growth projections.
- Refine Supply Chain Costs: Cost accountants analyze items in organizations' supply chains to understand their expenditures and identify inefficiencies. They may also look for ways to decrease supply chain costs.
- Assist with Pricing Strategies: Management uses cost accountant data to help create reasonable, profitable pricing decisions. They can also improve product pricing or profits by solving cost inefficiencies.
- Develop Budgets: Cost accountants help businesses develop spending budgets for various departments. These professionals use cost analysis to create accurate projections and control spending.
- Support Business Decisions: Managers integrate cost analysis and other information from cost accountants into their decision-making. Cost accountants may also provide crucial data on inventory control, activity-based costing, and operational performance.
Key Hard Skills for Cost Accountants
Enterprise Resource Planning System: These systems incorporate inventory control, cost analysis, and multilevel costing categories. Professionals can use these systems to create budgets, reports, and forecasts for management.
Microsoft Excel: In addition to the basic accounting formulas, formats, and functions, cost accountants use Excel for advanced insights. They should know how to work with pivot tables, macros, templates, and the scenario manager.
Data Analysis: Data analysis requires cost accountants to draw useful insights from raw data. Their analyses quantify what happens, why it happens, what will happen, and how to respond to these outcomes.
Variance Analysis: Variance analysis requires cost accountants to track and analyze differences between what things typically cost (standard cost) and what they actually cost.
Key Soft Skills for Cost Accountants
Communication: Cost accountants need to communicate with clients, staff, and managers. They also need writing and presentation skills to deliver their reports and analyses insightfully and effectively.
Problem-Solving: Accountants use problem-solving skills regularly. They analyze data, check for accuracy, and solve problems based on their findings. They do this with budgets, evaluations, and recommendations.
Organization: Cost accountants work with a great deal of information. Keeping this data organized efficiently helps ensure the accuracy of their information and reports.
Collaboration: Cost accountants need interpersonal and collaboration skills to work with other accountants and managers. They may also work alongside clients, suppliers, employees, and other stakeholders.
Types of Cost Accountant Jobs
Cost accountants can specialize in a particular field or industry by developing expertise in that sector's practices and requirements. In the following fields, cost accountants require specialized skills and knowledge of these industries' unique costs, processes, and expectations.
Construction cost accountants manage the budgets and costs for construction projects. They carefully track and record all expenditures, assigning them to specific projects. This leads to accurate billing for customers and more precise cost estimations and projections in the future.
Construction accountants track costs related to materials, labor, equipment, consulting fees, and insurance. Their work helps monitor project spending and refine the project bidding process. Entry-level accountants may focus on data collection or be limited to specific projects, whereas senior accountants handle large projects, budgeting, and reports.
Common Job Titles
- Construction Accountant
- Project Accountant
- Construction Cost Estimator
Manufacturing cost accountants calculate and track the costs of goods sold, including labor, material, and production costs. They also oversee inventory control and variation in inventory. This may require evaluating constraints or elevated costs as a result of inventory shortages or additional storage costs.
Cost accountants in manufacturing influence budgets, spending, and growth projections. Their work also helps with product pricing and process evaluations. Junior accountants may focus on researching cost variance and inventory constraints or tracking labor and materials costs, while senior accountants handle evaluations and analysis.
Common Job Titles
- Manufacturing Cost Accountant
- Plant Accountant
- Cost Accountant Controller
Government accountants specializing in cost accounting monitor costs and expenses for specific departments and agencies. They participate in budgeting and resource allocation, cost control and analysis, and price setting. They may also conduct performance measurements and program evaluations, which can influence financial and operational decisions.
Government accountants can also work for organizations that take on government contracts. These cost accountants ensure compliance and adherence to the reporting rules for cost allowability, cost allocability, and direct and indirect incurred costs. Junior-level accountants may be limited to data collection and reporting, while senior-level accountants manage analysis and evaluations.
Common Job Titles
- Government Cost Accountant
- Government Accountant
- Government Contract Accountant
Payroll accountants monitor the costs associated with employee labor and benefits. These accountants oversee employee pay, commissions, and benefits, plus any taxes and deductions required by labor laws and government regulations. This may require them to calculate and track labor as part of the cost of goods sold.
Payroll accountants can also conduct employee performance evaluations and efficiency assessments. They present reports based on their findings, which can lead to improved labor spending and operational refinements. Junior payroll accountants often handle ledger entries and standard salary calculations, while senior accountants oversee internal audits and analyses.
Common Job Titles
- Payroll Accountant
- Payroll Specialist
- Payroll Manager
How to Become a Cost Accountant
Aspiring cost accountants can take many paths to the field, but the typical route begins with a bachelor's in accounting. With this four-year degree, graduates can access many cost accountant jobs, though some employers may prefer candidates with a master's in accounting.
Many employers also value accounting certifications, such as the certified cost accountant credential from the Institute of Certified Cost and Management Accountants or the certified management accountant credential. Certified professionals need to pass an examination and maintain their credential through continuing education.
Not all employers require a bachelor's degree or additional credentials. Candidates with a combination of a two-year associate degree in accounting and professional experience may qualify for entry-level cost accountant positions.
Cost Accountant Job Outlook and Salary
As the economy continues globalizing, organizations will have a greater need for cost accountants. The Bureau of Labor Statistics (BLS) projects 7% growth for all accountants between 2020 and 2030, with 135,000 annual job openings during this period. Along with the strong outlook, higher-than-average salaries attract aspiring cost accountants to the field.
According to Payscale, the average salary for cost accountants is $59,310 as of September 2022. Salaries vary by location and experience. Professionals can also enhance their earning potential with further education and certifications or by pursuing work in a specialized industry.
Career Spotlight: Andrew Lokenauth
Can you explain what distinguishes a cost accountant from other types of accounting roles?
When you hear "cost accounting," think "cost efficiency." What distinguishes cost accounting from other roles is that you are advising management on the best course of action in terms of cost efficiency.
Why did you get into cost accounting? What initially interested you about the field?
I got into cost accounting as a back door into management. The goal of most companies is growth, and cost accounting is a skill that can help aid a company's growth. I got into cost accounting as a way to be part of the decision-making process. Pricing is the most crucial decision in any business.
I was part of the cost accounting function during my time at American International Group (AIG). Due to what I learned within the cost accounting function at AIG, I was able to use these skills to help drive business forward during my time at Signature Bank and at Amalgamated Bank for their initial public offering. You never know where cost accounting may take you, so my advice is to give it a shot. It can open up many doors.
What education did you need to pursue this career?
I have a degree in accounting and have worked in Big Four accounting. An easy way to be considered for a cost accounting role is to have an accounting degree with experience from a Big Four accounting firm.
What was the job search like after graduating with your degree?
My job search was not hard. I went to Pace University, and Pace University has great relationships with many accounting firms, as do many other schools. Many accounting firms come to career fairs and clubs in order to tap into the students there. My advice would be to go to career fairs at school or join an accounting club like Beta Alpha Psi in order to network for potential job opportunities. I became a member of Beta Alpha Psi at Pace University due to the networking opportunities it would create. I would recommend doing the same!
"Pricing is the most crucial decision in any business, and this role allows you to be part of the decision-making process."
What does a typical day in cost accounting look like?
One of the best things about being a cost accountant is that no two days are the same. This keeps the job fresh and interesting, not mundane and boring. You are analyzing different data sets and forming conclusions. Every month, the data changes. Every quarter, new patterns in data can emerge. I see many cost accountants transitioning into forensic accounting due to their ability to look at and understand data.
What are some of the most rewarding aspects of working as a cost accountant?
The most rewarding aspect of working as a cost accountant is that the work you do drives the company forward and assists management with the decision-making process. It is a very visible role. The work you do is used by management to make better business decisions.
Another rewarding aspect is the compensation. I was able to make a six-figure salary early on in my career (respective to my peers) and I have cost accounting to thank. You learn many great skills, such as how to think more analytically, and you learn how to communicate that to management. This is a very important skill if you want to transition to executive management.
What do you think is the most important skill cost accountants need to succeed?
Attention to detail is the most important. You do not want to be responsible for making an error due to the visibility of this function. Communication is also very important. You will be working with many different stakeholders, so you will need to be able to explain and talk in terms and phrases that are easy to understand, but still deliver your findings.
What advice would you give to students considering this career?
I would highly recommend considering cost accounting as an entry-level job, as it can open up many doors in the future. Pricing is the most crucial decision in any business, and this role allows you to be part of the decision-making process. I believe that I was able to ascend to director and vice president early in my role due to the skills I learned from cost accounting. I would highly recommend considering cost accounting as a stepping stone for your career.
Andrew Lokenauth is a finance and accounting executive, as well as a public speaker. Andrew has proven himself to be highly successful in the industry after graduating with a degree in accounting and finance from Pace University and starting his career at Goldman Sachs. Andrew is currently at a fin-tech startup as the vice president, director of finance and accounting. Prior, he was at Amalgamated Bank as VP, head of financial reporting and accounting policy, helping them to go public.
Andrew leverages his education and professional experience to provide insights around accounting and finance in order to help management translate their financials into actionable business decisions. Andrew has been in the industry for over 15 years, and has been featured in Forbes, TIME, Business Insider, Yahoo Finance, and U.S. News several times.
Questions About the Cost Accountant Job Description
What are the duties of a cost accountant?
Cost accountants monitor organizations' costs and create reports for budgetary, pricing, and cost analysis purposes. They track spending, changes in inventory costs, and the accuracy and compliance of cost records.
What skills do you need to be a cost accountant?
Cost accountants need to have strong communication, math, and problem-solving skills. They also need to know how to work with accounting and costing technologies.
What are the four types of cost accounting?
According to Investopedia, the four types of cost accounting include standard costing, lean accounting, marginal costing, and activity-based costing. Standard costing refers to the standard cost of goods sold. Lean accounting focuses on identifying and minimizing waste within an organization. Marginal costing analyzes costs related to production changes. Activity-based costing assigns indirect cost values to goods and services.
What is the difference between an accountant and a cost accountant?
Accountants record all financial information to determine the financial health of organizations or individuals. Cost accountants focus on the various costs that organizations incur and what these costs mean for operations, pricing, and supply chains.
Featured Image: Ngampol Thongsai / EyeEm / Getty Images
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