Cost accumulation definition

What is Cost Accumulation?

Cost accumulation involves the use of a formal cost accounting system to collect cost information. By collecting and analyzing cost information, management can make more informed decisions about the operations of a business. Cost accumulation systems fall into two main categories, which are noted below.

Related AccountingTools Courses

Accounting for Inventory

Cost Accounting Fundamentals

Job Cost System

A job cost system accumulates materials, labor, and overhead costs about individual jobs. It is designed for production processes that create products in smaller batches.

Process System

A process system accumulates costs by cost center and then assigns average costs to products. It is designed for production processes that create large quantities of units over an extended period of time.