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(a) Mary Barett is not sure about the difference between cost accounting and a cost accounting system. Explain the difference to Mary.
(b) What is an important feature of a cost accounting system?
(a)
Cost accounting:
Cost accounting is the process of collecting, summarizing and then evaluating each and every alternative course of action that can be undertaken in order to produce a product. The alternative with the most efficient results would be chosen.
To determine: The difference between cost accounting and a cost accounting system.
Explanation of Solution
The difference between cost accounting and a cost accounting system is explained as below.
Cost accounting is the process of collecting, summarizing and then evaluating each and every alternative course of action that can be undertaken in order to produce a product. The alternative with the most efficient results would be chosen.
Cost accounting system is a branch of managerial accounting that is concerned with the accumulation of all the costs that have been incurred in the production of a product and the using such information for decision making purposes.
Hence, the difference between cost accounting and a cost accounting system is explained as above.
(b)
Cost accounting:
Cost accounting is the process of collecting, summarizing and then evaluating each and every alternative course of action that can be undertaken in order to produce a product. The alternative with the most efficient results would be chosen.
To determine: The important feature of a cost accounting system.
Explanation of Solution
The most important and the most crucial feature of the system is the use of perpetual inventory system. Perpetual inventory system is the system that records the sale as well as the purchase of inventory in the near real time. The system provides the highest details on the changes that are made in the inventory.
Hence, the most important feature of a cost accounting system is stated as above.
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