Cost-based accounting is an approach to financial reporting that focuses on the cost of producing goods or services. This method highlights expenses associated with creating and selling products, such as labor, materials, overhead, and marketing. The resulting information can be used to make decisions about pricing, production levels, and profit margins. Cost-based accounting helps companies understand the potential returns from different investments, and encourages them to focus their efforts on delivering higher-quality services to maximize profits. By looking at their costs in great detail, businesses can control cost overruns and operate more efficiently.