Purpose of Cost Accounting

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CH01_Bragg_36794 3/13/01 9:40 M Page 9 PART I Purpose of Cost Accounting 9 CH01_Bragg_36794 3/13/01 9:40 M Page 10 CH01_Bragg_36794 3/13/01 9:40 M Page 11 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 the cost accountant is…show more content…
However, in terms of volume, the cost accountant probably issues more scorekeeping report cards than reports. These are simple reports, usually presenting a trend line of performance for a single key measurement that is posted frequently—perhaps daily. For example, the accounting staff may be called on to create a graph of machine utilization for each machine and post it on the appropriate machine every day. This is a highly standardized repetitive format that is easy to prepare and is targeted at a specific performance criterion. One can count on creating and distributing hundreds of these reports over the course of a full career in accounting. 13 CH01_Bragg_36794 3/13/01 9:40 M Page 14 ROLE OF COST ACCOUNTING BUDGETING Several of the subsidiary-level budgets that roll up into the main corporate budget involve information to which the cost accountant can contribute a great deal (Chapter 36). For example, the production budget includes estimated direct costs for each product the company expects to manufacture in the upcoming year, as well as estimated overhead allocations per unit based on expected production volumes. Cost accountants are in the best position to supply this information since they have access to all the needed information—bills of material, routings, throughput capacity constraints, and sales estimates by unit. Similarly, the direct labor budget requires input about expected labor costs, which requires information from
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