Limitations of Cost Accounting
1. Expensive: Cost Accounting is an expensive task, as it will require hiring of additional workforce other than one who manages financial accounts and cost accounting needs wide knowledge of costing aspects.
2. Requirement of Reconciliation: Information recorded in financial and cost accounts is totally different as both are based on their own principals and rules. Treatment of same transaction can be different is both these form of accounting and hence, it will show different results, in order to prepare any report a reconciliation will be required to verify the accuracy.
3. Promote Duplication: Preparation of cost accounting leads to duplication of work, as for the same transaction two different books are to be maintained, which creates duplication of same task and deployment of additional workforce.
4. Narrowed Approach: Cost accounting only focus on one aspect that is cost reduction and cost cutting, which might not be beneficial in all business environment and in current dynamic business environment relying on single strategy might not result in gains and does not fit all the businesses.