What Does a Cost Accountant Do? (With Skills and Salary)
By Indeed Editorial Team
Updated 15 January 2023
Published 3 January 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Cost accountant professionals play an instrumental role in optimising a company's finances and maximising its profits. They evaluate each step of the production process and manufacturing operation to perform detailed data analysis for this purpose. Learning about what a cost accountant does may provide insight into what this position entails and how you can carry out this role effectively. In this article, we answer the question, ‘What does a cost accountant do?', highlight the qualifications and skills required to become one, explore their typical work environment and discuss how much they earn.
What does a cost accountant do?
To answer 'what does a cost accountant do?', it's helpful to look at their common roles and responsibilities. A cost accountant is a financial expert who analyses a company's expenses in operations, manufacturing and different production processes. They understand and examine how several factors such as labour costs, raw materials and marketing costs influence the product's retail price. A thorough assessment of the expenses incurred within the supply chain helps business owners or managers budget accordingly and make more informed financial choices.
Thus, cost accountants play a key role in generating more revenue for the business by examining business processes. Additional responsibilities of a cost accountant can include:
collecting and analysing data about operational costs
assessing elements within the supply chain and suggesting cost-saving strategies
managing inventory and preparing the inventory audit
preparing accounting reports to update senior management about factors that impact the profitability of products
reviewing payments and tax information to ensure their accuracy
planning the financial goals of a company and creating a budget proposal for the fiscal year
collaborating with production and manufacturing managers to design new strategies to enhance business processes
maintaining a company's account that includes information on general company expenditure
Average salary of cost accountants
The national average salary of a cost accountant is $4,624 per month. Their salary depends on academic qualification, years of experience and the type and size of industry they're working in. The remuneration may also depend on whether you work as a full-time company employee or if you're a private consultant with your own independent practice.
Work environment of a cost account
Cost accountants generally seek employment in consulting or accounting firms and may even work in government organisations. Some may work directly for businesses within the manufacturing and retail industry. Cost accountants are full-time employees who typically work in an office setting for fixed hours. They may have to do regular site visits to locations such as manufacturing plants and familiarise themselves with production operations.
Cost accountants may also work independently or practice as freelance consultants. Small businesses or start-ups that cannot justify the full-time services of a cost consultant may periodically hire these private consultants to analyse their company's expenses and make appropriate cost-saving recommendations. It's important for freelance or private consultants to have substantial experience in analysing data within supply chains to increase their employability. Working as private consultants can offer greater autonomy to work according to their personal schedule but may have inconsistent monthly earnings.
Related: How to Become a Freelance Accountant
Skills of a cost accountant
Cost accountants require a combination of both technical knowledge and soft skills to fulfil their duties effectively. Here are some essential skills that you can cultivate to succeed in your profession as a cost consultant:
Mathematical and computer skills
A strong foundation in mathematics and statistics can be crucial for cost accountants to set cost estimates and manage organisational budgets. They also require basic knowledge of accounting and business management software that enables cost accountants to perform complex calculations and modelling. Demonstrating high proficiency levels in operating industry-specific software can allow cost accountants to perform duties, such as processing and analysing data effectively. Cost accountants also require knowledge of common data management, enterprise resource planning and analytical tools.
Related: What Are Technical Skills?
Analytical skills refer to collecting, analysing, and interpreting data to design solutions to complex problems. When cost accountants evaluate a company's supply chain and organisational purchases, they analyse that data to identify areas of improvement, suggest ways to cut costs and increase overall productivity and profitability. Their in-depth knowledge of business operations and industry practices may help create practical solutions to maintain a company's financial well-being.
Cost accountants require strong written and verbal communication skills to convey their findings from their data analysis to senior management or clients who may not have a strong technical background. They may have to explain complex concepts to people who aren't well-versed in them. Additionally, cost accountants may also have to generate accounting reports, create presentations and prepare proposals. Good communication skills are also important for cost accountants as they often collaborate with a multi-department team, which includes production managers and finance personnel. Active listening and accepting feedback and suggestions from colleagues are also vital for cost accounts.
Cost accountants manage various sets of data, financial documents and accounting reports. It's important for them to systematically organise all of these materials and make it easier for them to obtain the relevant information as required. They often undertake several time-sensitive tasks simultaneously and work on strict deadlines. Thus, strong organisational skills can also enable cost accountants to manage their time effectively when prioritising their tasks to meet deadlines.
How to become a cost accountant
Here are the steps you can follow if you're interested in pursuing a career as a cost accountant:
1. Earn a bachelor's degree
Cost accountants usually require at least a basic bachelor's degree in accounting, finance, business administration or any other related discipline to start their career. The degree programme, which is completed over four years, equips students with the fundamentals of organisational accounting concepts. Some of the modules within the degree programme may include asset management, profitability analysis, compliance, tax regulation and accounting life cycle. Choosing subjects and specialisations that are particularly specific to cost accounting can help you gain in-depth knowledge about designing suitable strategies that positively impact activity-based costing and budgeting.
You may also consider pursuing a two-year master's degree in management accounting or business administration if your career goal is to attain a management position. The additional knowledge that you gained from your master's programme may make you a more appealing candidate for senior cost accounting roles. Your current employer may consider you for a senior cost accountant position with more leadership responsibilities.
2. Gain relevant experience
Complete relevant internships if they're offered to you as part of your degree programme. Internships can enable you to learn more about the demands of working in the finance and accounting sector. An internship also provides you with an opportunity to shadow other senior and experienced accountants. This might help you gain a better understanding of the typical responsibilities of an accountant.
Upon graduation, you may apply for entry-level positions within the accounting or finance department of companies. Entry-level positions generally include junior accountant, accounting assistant and staff cost accountant. It's essential to gain sufficient experience in these junior positions as it would offer a strong foundation for your role in the future as a cost accountant.
3. Complete relevant certifications
While it's not mandatory, getting certified can significantly increase your employability. Certifications typically enhance your experience and skills in accounting, tax and audit. They also demonstrate your commitment to continuous learning and your passion for becoming more proficient in skill development. You may consider pursuing some of the following accounting certifications as per your interest and specialisation:
Certified Public Accountant (CPA)
Certified Internal Auditor (CIA)
Certified Information Systems Auditor (CISA)
4. Start applying for cost accountant positions
When you've gained the required academic qualifications and gathered sufficient working experience, you can start applying for cost accountant positions. Be sure to update your resume to include relevant experience in the accounting field and highlight specific responsibilities and achievements. List all accounting certifications that you have completed and outline the skills relevant to the position you're applying for. Remember to add a customised cover letter that highlights your core skills, expertise and experience with each job application.
Salary figures reflect data listed on Indeed salaries at time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience academic background and location.
Explore more articles
- What Careers Can You Pursue With a Forensics Science Degree?
- What Does a Business Development Executive Do? (With Skills)
- What Is Behavioural Therapy? (With Definition and Types)
- What Does a Process Technician Do? Duties and Skills
- How To Become a Facilities Manager (Plus Skills)
- What Does a Zookeeper Do? (With Role, Skills and Salary)
- Job Description for Communications and Marketing Roles
- What Does a Production Designer Do? A Definitive Guide
- Optician vs. Optometrist: Definitions and Differences
- What Does an Undertaker Do? (Plus Salary and Skills)
- What Does an Event Manager Do and What Are the Skill Sets
- How to Become a Data Architect (With Role and Requirements)