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Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127

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BuyFindarrow_forward

Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127
Textbook Problem

Without redrawing the figure, discuss the changes that would occur in Figure 15.8 (pg. 602) if the company used an actual costing system instead of a standard cost system.

Summary Introduction

To determine: The changes in the diagram if the firm used an actual costing process instead of a standard cost process.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation

Given diagram:

Here,

RM refers to Raw Material

MOH refers to Manufacturing OverHead

DL refers to Direct Labor

GL refers to General Ledger

UC refers to Unit Cost

Determine the changes in the diagram if the firm used an actual costing process instead of a standard cost process:

The following are the changes in the process inputs:

Standard raw material and excess raw material would issue the notice.

Raw material returned notice.

The following are the changes in the process outputs:

The GL standard cost update will be replaced as GL actual cost update.

There would be no variance reports to managers.

GL cost of goods completed update will now notify the GL process of the actual cost of jobs completed rather than the standard cost of jobs completed...

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