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What is a cost accountant and how to become one

At a glance

  • Cost accounting refers to the management of expenses that come with operating a company, such as rent and shipping costs.
  • The U.S. Bureau of Labor Statistics (BLS) refers to this position as “management accountant” and says the role combines accounting and financial information to make business decisions. 
  • According to BLS, employment is projected to grow by 4% between 2022 to 2032.
  • University of Phoenix offers a Bachelor of Science in Accounting degree that can help prepare you to pursue a career as a cost accountant. 

Cost accounting refers to the management of expenses that come with operating a company, such as managing budgets and evaluating financial performance to increase profits. Professionals in this role primarily work with internal parties — meaning other departments within an organization — to track, manage and reduce costs. They set standard costs of business processes like shipping, production, labor and more.

They are typically private accountants, which means they work with businesses, whereas public accountants provide auditing, tax, advisory and consulting services to private, public or governmental agencies.

A cost accountant is just one of many finance jobs that can align with an accounting degree. Cost accounting professionals work in a variety of industries and in companies of all sizes. Almost every organization, from health service providers to online retailers, needs cost accountants.

If you are preparing to enter the accounting or finance field, learn more about cost accounting to decide whether this role is right for you. 

Interested in accounting? A degree from University of Phoenix is a great place to start! 

What does a cost accountant do?

A cost accountant, also known as a management accountant, tracks finances related to running a business. These line items range from static expenses, like rent payments for a warehouse, to dynamic expenses, like the price of packages used for shipping orders. A cost accounting professional is similar to a bookkeeper. The main difference is that a bookkeeper also looks at income and generates balance sheets. Here are a few day-to-day tasks of cost accountants: 

  • Track and organize expenses. Ensure all expenses are listed and sorted into categories. 
  • Develop budgets. Help departments submit budget requests for additional supplies or resources. 
  • Identify savings opportunities. Prevent overspending. 
  • Assist with pricing. Estimate what the company needs to turn a profit. 
  • Work with senior leadership. Provide insights to management so they can make better decisions. 

Cost accounting can become more stressful toward the end of the fiscal year or the end of each fiscal quarter, when departments review their budgets and present plans for the coming months. These professionals may use specific costing methods to aid in their work

Skills needed to be a cost accountant

Every professional uses both hard and soft skills in the modern workplace. Hard skills are specific to the role and can be taught and evaluated — like creating formulas in a spreadsheet. Soft skills are harder to teach and are often characteristics of various employees. These skills can be used across different positions and levels in the company. 

Here are a few hard skills that cost accountants need: 

  • Data analysis
  • Spreadsheet development
  • Reconciliation
  • Advanced math
  • Forecasting

Here are a few soft skills that cost accountants need: 

  • Organization
  • Attention to detail
  • Communication
  • Problem-solving 
  • Critical thinking

For example, a cost accountant might notice that one department’s expenses are increasing unexpectedly. They use critical thinking to create a hypothesis about why this is and then use data analysis to confirm their theory. They then communicate their findings and help that department find solutions to lower its costs. 

Cost accounting hard skills can be learned through formal education or formal on-the-job training. Soft skills take more time to develop and require constant practice. 

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How to become a cost accountant

Whether you are new to the workforce or looking to make a career change, you can take steps today to become a cost accountant. In several ways, cost accounting is similar to the roles and responsibilities of accountants or auditors; those looking to begin a career in cost accounting should consider the following: 

  • Pursue higher education. According to the U.S. Bureau of Labor Statistics (BLS), cost accountants typically need either a bachelor’s degree in accounting or a related field, like finance or business administration. Some employers require a master’s degree.
  • Start with entry-level positions. Some employers require cost accounting experience to qualify for a job. Often, cost accounting positions require company knowledge, such as budgets and performance. You could start your career by working within a larger accounting department to develop skills and experience and learn more about the company’s costs, expenses and profits. 
  • Grow your skills and knowledge. Learn more about the company and boost your knowledge of accounting practices. 
  • Work your way up. Once you have the necessary education and cost accounting experience, you can apply for more advanced positions. 

If you are ready to return to school to pursue cost accounting, there are a few degrees to consider. Here are a few options that can give you the hard and soft skills you need: 

  • Bachelor of Science in Accounting: Accounting is the main focus of this degree and should prepare you to enter at least an entry-level position. 
  • Bachelor of Science in Business: While this degree isn’t accounting-specific, it can help you understand how companies are run. This degree should also have some accounting courses that can give you a foundational education. 
  • Master of Business Administration: This advanced degree is for people who are already working in accounting. This degree prepares you to enter a leadership role and can give you advanced skills based on your career goals. 

You don’t have to rush into a degree unless you are certain that it will support your career goals. For example, consider whether an accounting degree or a finance degree can give you the appropriate skills to land a job you love. 

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What is a cost accountant’s salary?

Cost accountants’ salaries vary depending on where they work, their experience levels and their seniority. However, as of May 2022, accounts and auditors earned an annual salary ranging between $48,560 and $132,690, according to data from the top and bottom 10% of earners from BLS. Cost accounting can be categorized as a type of accountant and may be able to enjoy similar earnings.

While accounting salaries have grown over the years, their future growth trajectory is unclear. Artificial intelligence and machine learning are growing in complexity, and, in time, this technology might be able to take on more accounting tasks. Effective cost accountants can increase their value — and thus their salaries — by taking on more strategic planning and analysis roles while letting AI technology take over basic data collection and rote work elements. 

Salary ranges are not specific to students or graduates of University of Phoenix. Actual outcomes vary based on multiple factors, including prior work experience, geographic location and other factors specific to the individual. University of Phoenix does not guarantee employment, salary level or career advancement. BLS data is geographically based. Information for a specific state/city can be researched on the BLS website.

What is the job outlook for cost accountants?

The job outlook for this field is expected to grow at an average rate compared to other occupations in the American market. According to BLS, there will be a projected 4% growth in the field from 2022 to 2032, which could lead to 126,500 openings for accountants and auditors each year. This is good news for future cost accounting professionals who want to grow their careers. 

While AI is often perceived as a threat to accountants, it is also an opportunity. Cost accountants who embrace the latest software tools and tech will be able to enter more positions that already have tech-based systems in place. Tech-friendly accountants can also modernize companies that still rely on spreadsheets to balance their books.

BLS Occupational Employment Projections, 2022-2032 is published by the U.S. Bureau of Labor Statistics. This data reflects BLS’ projections of national (not local) conditions. These data points are not specific to University of Phoenix students or graduates.

Earn an accounting degree at University of Phoenix

If you’re interested in becoming a cost accounting professional, University of Phoenix (UOPX) can help. The University offers a Bachelor of Science in Accounting degree that prepares you with financial skills to help organizations run efficiently. The cost accounting skills taught in the program include performance management, budgeting, capital asset selection, inventory control and more. If this sounds like the degree for you, visit the University of Phoenix website to learn how UOPX can help you save time and money on your education. 

Photo of blog author Michael Feder smiling.

ABOUT THE AUTHOR

Michael Feder is a content marketing specialist at University of Phoenix, where he researches and writes on a variety of topics, ranging from healthcare to IT. He is a graduate of the Johns Hopkins University Writing Seminars program and a New Jersey native!

 

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