# Core Definitions in Cost & Management Accounting
Before diving into computations, you must clearly distinguish four foundational terms. Students often confuse them because they sound similar, but each has a precise scope.
## 1. Cost
The actual or notional expenditure incurred on, or attributable to, a specific product, activity, or cost object.
- Actual cost — money actually spent (e.g., ₹500 paid for raw material).
- Notional cost — a cost that is not actually paid in cash but is attributed for decision-making (e.g., notional rent of owned premises).
## 2. Costing
The techniques and processes used to ascertain cost. It is the methodology — the "how" of arriving at the cost figure (e.g., job costing, process costing, marginal costing).
## 3. Management Accounting
The collection, analysis and presentation of information relevant for:
- Planning
- Controlling
- Decision-making
It is broader than cost accounting because it draws on financial accounting, cost accounting, statistics, and economics to help management.
## 4. Cost Management
The application of management accounting concepts specifically for planning, monitoring and controlling cost. It is action-oriented — converting information into cost-saving decisions.
## Quick Comparison Table
| Term | Nature | Purpose |
|---|---|---|
| Cost | A figure / amount | Represents resources consumed |
| Costing | Technique / process | Method to compute the cost figure |
| Management Accounting | Information system | Supports all management decisions |
| Cost Management | Application | Specifically targets cost control & reduction |
## Objectives of Cost & Management Accounting
Keep these five objectives at your fingertips — exam questions often ask you to list them:
1. Ascertain Cost — determine cost per unit / per job / per process.
2. Determine Selling Price & Profit — cost + desired margin = SP.
3. Cost Control — keep cost within pre-set standards / budgets.
4. Cost Reduction — permanently reduce cost without sacrificing utility / quality.
5. Assist Management in Decision Making — make-or-buy, shut-down, pricing, etc.
> Memory hook: A-D-C-C-A → Ascertain, Determine SP, Control, Cut (reduce), Assist.