Cost Accounting Essay

Cost accounting can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). The data collected is then reviewed to reach a selling price or identify where investments are possible. The principal aim of cost accounting is advising the top administration or the top management on the most suitable method of action based on the cost capability and efficiency. Cost accounting offers

historical cost accounting versus current value accounting. The historical cost is the original nominal monetary value of the items purchased. Based on the historical cost concept, it states that the amount of the assets acquired should be recorded with the original amount paid at date of acquisition and should include all costs necessary to get the asset in place and ready for use. Historical cost helps to distinguish an asset’s original cost from its current replacement cost, current market cost and inflation-adjusted

The managerial accounting system at Bridgeton, as it is presented, seems to be lacking detail necessary for efficient analysis. The sections used are sales, direct material, direct labor and overhead by account number, each divided into individual accounts and summed to find totals. There is no separation of fixed and variable costs in any of the accounts, making it difficult to analyze exactly where operations are costing money and, therefore, how they could possibly be improved. The presentation

Task 1 Introduction Activity based cost simply is an accounting method that shows the actions an organization or a firm clearly assigns costs to products. ABC system indicates the connection between activities, costs and production. This system can be used in reduction of overhead costs and it is usually used in complex environment where production processes are shortened. (Investopedia, 2016) To give a further lighting of the activity cost system the process flow is as follows: According to

learning concept within cost accounting that is often overlooked in day-to-day operations by a large amount of professionals. For any business that plans on generating a profit from a specific project it must know how to effectively determine job costs. Job costing is comprised of the following three activities that relate to a specific job: materials, labor, and overhead. The materials sector of job costing has to do with gathering the costs of necessary elements and assigning costs to a direct product

maintain the volume. 2. Given some apparent problems with Wilkersons cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Our conclusion is, that they should not adopt

The historical cost: A technique of accounting based mostly chiefly on the first cost incurred in group action, it is relaxed to some extent by such exercise because the valuation of stock at the lower of value and web realizable price and appraisal of capital asset. The benefits of historical cost accounting is comparatively objective, however, the results of historical cost accounting will be false as profit will be exaggerated in terms of current values, and capital maintenance and anxious with

utilize the Historical Cost accounting to report financial statements and reflect the profitability of business. It is more conventional and simple method. Nevertheless, when considered in relation to inflation and price changes, the alternative methods such as Current Purchasing Power Accounting (CPPA), Continuously Contemporary Accounting(CoCoA) and Current Cost Accounting(CCA) would be more appropriate. There is an assumption that ‘ applying those alternative forms of accounting to adjust items in

Cost accounting information play a crucial role for manufacturing organizations in making internal decisions. It is important for management to understand the cost implications of any decisions that they make for their organizations. Managerial accounting under which cost accounting lies, provides the management with a break-down of internal manufacturing and operational costs that help them in making the right decisions for their organizations. Some of the decisions that are made using cost accounting

information, such as product margins, that vary from the information reported for a traditional cost method. It’s also possible that some activity-based costs may be irrelevant in certain decision-making scenarios; for example, ABC does not conform to accounting standards and should not be used for external reporting. Since traditional cost figures tend to be the norm, interpreting ABC data along with regular accounting information can be confusing and lead to bad decision-making. The use of software can streamline