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PART I
Purpose of Cost Accounting
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CHAPTER 1
Role of Cost Accounting
When properly implemented, the cost accounting function can have a pervasive influence in the modern corporation. Unfortunately, it is not always properly implemented because management often is not completely aware of all the uses to which the cost accounting function can be put. This chapter describes the main categories of activities in which this function can become involved, and can be used as a guide by the controller in creating a well-rounded niche for the cost accountant.
EXTERNAL REPORTING
The key task for
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Business unit-level reports. These reports must include a much larger quantity of information, for the recipient (the plant manager) needs to know about the operation of each department, as well as a host of operational issues such as the cost of quality, inventory turnover, machine utilization, profitability, and cash flow projections. This tends to be the most voluminous of all reporting packages, as well as the one that includes the greatest mix of financial and operational information. Function-level reports. These reports can be issued to individual departments or at lower levels, for example, to the supervisors of individual machines. Such reports are custom-designed for each recipient, with some requiring more financial data (e.g., for the sales manager who wants to know about customer bad
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SCOREKEEPING
debts or orders booked) and others including almost entirely operational information (e.g., for the warehouse manager who is interested in inventory turnover, kiting percentages, and receiving accuracy).
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Project-specific reports. A project report is slanted more toward just those costs being incurred for a specific purpose and so tends to be heavy on direct costs and light on most other allocations. This report usually compares incurred costs against budgeted costs expected to have
Managerial accounting is essential for decision making. Making the best choice depends on the manager's goals, the anticipated results from each alternative, and the information available when the decision is made (Schneider, 2012). The different techniques associated with managerial accounting are very helpful in the decisions that need to be made. In order to truly understand decision making with managerial accounting one must first discern exactly what managerial accounting means and some of the techniques associated with it. The definition of managerial accounting will be discussed along with the techniques of cost management techniques, budgeting, and quality control.
The management of the cost of the company's product is an important part, which a cost accountant has to deal with. The profit of the company depends on the extent of the control on the production cost of the product. As the increase in sales and the profitability is the main aim of the management, so it will attract more conflicts of views and multiple sources of actions. A cost accountant has work in this direction and clears the things to the management so that they can have appropriate decisions with regard to the product, its costs and the company's profits at
Bhimani, A., Horngren, C., Datar, S., Rajan, M. et al. (2012) Management and Cost Accounting. 5th ed. Edinburgh: Prentice Hall, p.369 - 378.
Would factory security and assembly activities be best classified at an appliance manufacturing plant as unit-level, batch-level, product-level, or organization-sustaining?
Financial reporting is extremely important in our everyday life. You have heard of the many
| |Within the relevant range, if there is a change in the level of the cost driver, then: | | | |
Cost accounting is not a solution to management problems. It is a management tool designed to provide information that facilitates sound decisions. The two primary objectives of cost accounting are 1) to match cost with revenue and 2) to match resource consumption with the units of service provided.
Sub Micron Devices started its operations in mind 1980s. The company was located in Phoenix, Arizona, and had 400
>Partnership- All partners are liable for increasing capital income,if they have any loans they will be individually secure.
Research In Motion (RIM) and Apple Inc, are the two major technology based giants. According to Rahab and Hartino (2012), the use of information technology provides a business with improved efficiency which can be optimally utilized for gaining competitive advantage. For any company, either big or small, it is very much necessary for them to keep the accounts of their financial as well as managerial activities. They need to know about their costs so that they can know their progress and as well as can cut off unnecessary costs to increase profitability. Cost accounting system in simple terms can be understood as the very basic accounting
This paper analyzes the management accounting applications, which try to improve the Activity-Based Costing (ABC) method. First, the paper describes them using the Strategic Management Accounting (SMA) stream. Then it presents the main features of these applications. Second, the paper examines in detail two of these features: the widening of the analysis perimeter and the relevant level of details to analyze the costs. Subsequently, it analyzes several proposals, such as Customer-Driven ABC, Interorganizational Cost Management (IOCM), Resource Consumption Accounting (RCA) and Time-Driven ABC (TDABC). Finally, it describes an experience observed in the IT
For any firm, it is very much critical and crucial for the accurate estimation of product costs in order for the operations to be profitable. It is very much essential for companies to know which products would actually generate profit for them which can only be found out by correct cost estimation. For such cost estimation companies adopt certain system basically known as a costing system or product system or a cost accounting system. Costing system (cost accounting system), can simply be understood as a system that can be adopted or used by a company or a firm for estimating the cost of their products (goods or services) so as to analyze profitability, valuation of
The statement “Cost accumulation to determine the cost of goods sold is an example of the control function of management accounting work” is false. cost accumulation suggests the route in which expenses are gathered and identified with specific client, group, employments, request, groups, division and strategy where as a control in management accounting work is identified with the complete method of planning and control of the organization organizing in evaluating the people performance with respects achieving the end objective furthermore in the outlining and working of framework in accomplishing organizational goals. (2016)
Cost accounting, as a tool of management, provides management with detailed records of the costs relating to products, operations or functions. Cost accounting refers to the process of determining and accumulating the cost of some particular product or activity. It also covers classification, analysis and interpretation of costs. The cost so determined and accumulated may be the estimated future costs for planning purposes, or actual (historical) costs for evaluating performance. The Institute of Cost and Management Accountant (ICMA), London, defined cost accounting as “the process of accounting for cost from the point at which expenditure incurred or committed to the establishment of its