What Is a Cost Accountant?

A cost accountant helps an organization manage its costs, create accurate and sustainable budgets, and improve operational efficiency. These professionals analyze expenses and present cost-saving insights to reduce waste and increase profitability.

Cost accountants work in many industries, including healthcare, construction, and manufacturing. They collaborate with other accounting and finance professionals, managers and stakeholders.

The cost accounting profession features many entry-level analyst and accounting roles. More experienced professionals can access accounting management and financial controller roles.

Discover more about what cost accountants do, including skills and specializations.

Cost Accountant Duties

Cost accountants use their expertise to provide financial insight about expenses, budgets, and supply chains. They analyze expenditures and operations to look for inefficiencies and money-saving opportunities.

A cost accountant often works with other accounting and finance professionals to present management with forecasts, reports, and strategies to improve operations and profits.

Some of the main responsibilities include:

Cost Accounting Areas of Expertise

Through education and experience, cost accountants may specialize in the field or industry that interests them most. Their expertise in that sector's practices and requirements may lead to more employment opportunities and higher earning potential.

Healthcare

Healthcare cost accountants analyze the expenses and budgets for hospitals, medical centers, and clinics. They review the cost of patient care, staffing, and medical equipment, as well as insurance and patient billing matters. To thrive, these professionals likely need an understanding of healthcare regulations and patient rights.

In their early careers, healthcare cost accountants may work in general healthcare accounting or billing. In time, they can progress into more senior analyst or accounting positions that oversee departments or entire facilities.

Common Job Titles

• Healthcare cost accountant
• Healthcare financial analyst
• Director of healthcare finance
• Clinical management consultant

Construction

In the construction industry, cost accountants manage the expenses for construction organizations and projects. They review budgets and provide variance analysis for current projects and job proposals. Their work helps construction companies with accurate customer billing and growth projections.

Construction cost accountants must adhere to the industry's regulatory and legal requirements. Entry-level cost accountants may handle the tracking of expenditures for personnel, equipment, and materials, leaving the budgeting, analysis, and consulting to senior professionals.

Common Job Titles

• Construction/project cost accountant
• Project cost analyst
• Construction cost manager
• Construction cost estimator

Manufacturing

Manufacturing cost accountants analyze the costs for a manufacturing organization's production and business activities, such as labor and inventory. They identify cost variances and investigate the reasons and solutions for the differences. They also look for accuracy in reported data and potential or unseen risks and variances.

Manufacturing cost accountants create detailed reports and suggestions based on their findings. They may also present an analysis of what certain changes to manufacturing designs and production processes can do for costs. Manufacturing cost accountants often begin as cost analysts.

Common Job Titles

• Junior cost analyst
• Cost accounting manager
• Cost accountant controller
• Plant accountant

Government

Government cost accountants monitor and analyze government spending and assist in the financial closing process. They present detailed cost variance analysis, along with forecasts, budgets, and resource allocation insight. Government cost accountants may also review internal policies and procedures to identify inefficiencies and saving opportunities.

Government cost accountants typically begin in junior accounting or analyst roles that handle small tasks within larger projects, such as research and accuracy audits. More experienced and senior cost accountants take control of analysis, budgets, and compliance issues.

Common Job Titles

• Government cost accountant
• Government accountant
• Government financial analyst
• Budget analyst

How to Become a Cost Accountant

You can become a cost accountant from various pathways, but you typically need a bachelor's degree in accounting or a related discipline. Some employers prefer candidates with a master's degree and professional experience.

Accounting certifications can also help improve your job prospects, such as the certified professional cost accountant or the certified management accountant credential. Depending on the path you choose, you may spend between 4-6 years in school, plus the time you invest gaining experience and postgraduate credentials.

Cost Accountant Salary and Career Outlook

Your specific cost accountant salary may depend on several factors, including your location, employer, and qualifications. According to the Bureau of Labor Statistics (BLS), the median annual salary for accountants and auditors was $79,880, as of May 2023. The top 10% of earners in the field made more than $137,280.

The BLS projects 6% growth for accountants between 2023 and 2033, which outpaces projections for all occupations but is limited by automation taking away some accounting responsibilities. However, this could put more emphasis on the analytical duties of an accountant, which bodes well for cost accountants.

Career Spotlight: Andrew Lokenauth

Can you explain what distinguishes a cost accountant from other types of accounting roles?

When you hear "cost accounting," think "cost efficiency." What distinguishes cost accounting from other roles is that you are advising management on the best course of action in terms of cost efficiency.

Why did you get into cost accounting? What initially interested you about the field?

I got into cost accounting as a backdoor into management. The goal of most companies is growth, and cost accounting is a skill that can help aid a company's growth. I got into cost accounting to be part of the decision-making process. Pricing is the most crucial decision in any business.

I was part of the cost accounting function during my time at American International Group (AIG). Due to what I learned within the cost accounting function at AIG, I was able to use these skills to help drive business forward during my time at Signature Bank and at Amalgamated Bank for their initial public offering. You never know where cost accounting may take you, so my advice is to give it a shot. It can open up many doors.

What education did you need to pursue this career?

I have a degree in accounting and have worked in Big Four accounting. An easy way to be considered for a cost accounting role is to have an accounting degree with experience from a Big Four accounting firm.

What was the job search like after graduating with your degree?

My job search was not hard. I went to Pace University, and Pace has great relationships with many accounting firms, as do many other schools. Many accounting firms come to career fairs and clubs in order to tap into the students there.

My advice would be to go to career fairs or join an accounting club like Beta Alpha Psi in order to network for potential job opportunities. I became a member of Beta Alpha Psi at Pace due to the networking opportunities it would create. I would recommend doing the same.

What does a typical day in cost accounting look like?

One of the best things about being a cost accountant is that no two days are the same. This keeps the job fresh and interesting, not mundane and boring. You are analyzing different data sets and forming conclusions. Every month, the data changes. Every quarter, new patterns in data can emerge. I see many cost accountants transitioning into forensic accounting due to their ability to look at and understand data.

What are some of the most rewarding aspects of working as a cost accountant?

The most rewarding aspect of working as a cost accountant is that the work you do drives the company forward and assists management with the decision-making process. It is a very visible role. The work you do is used by management to make better business decisions.

Another rewarding aspect is the compensation. I was able to make a six-figure salary early on in my career (respective to my peers) and I have cost accounting to thank. You learn many great skills, such as how to think more analytically, and you learn how to communicate that to management. This is a very important skill if you want to transition to executive management.

What do you think is the most important skill cost accountants need to succeed?

Attention to detail is the most important. You do not want to be responsible for making an error due to the visibility of this function. Communication is also very important. You will be working with many different stakeholders, so you will need to be able to explain and talk in terms and phrases that are easy to understand, but still deliver your findings.

What advice would you give to students considering this career?

I would highly recommend considering cost accounting as an entry-level job, as it can open up many doors in the future. Pricing is the most crucial decision in any business, and this role allows you to be part of the decision-making process. I believe that I was able to ascend to director and vice president early in my role due to the skills I learned from cost accounting. I would highly recommend considering cost accounting as a stepping stone for your career.

Andrew Lokenauth

Andrew Lokenauth is a finance and accounting executive, as well as a public speaker. Andrew has proven himself to be highly successful in the industry after graduating with a degree in accounting and finance from Pace University and starting his career at Goldman Sachs. Andrew has worked at Amalgamated Bank as VP, head of financial reporting and accounting policy, helping them to go public.

Andrew leverages his education and professional experience to provide insights around accounting and finance in order to help management translate their financials into actionable business decisions. Andrew has been in the industry for over 15 years, and has been featured in Forbes, TIME, Business Insider, and Yahoo Finance several times.

Questions About the Cost Accounting Role