Costs Accounting Systems

Cost Accounting Systems

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American Public University

Abstract

The systems and techniques used in the accounting process by organizations which allows them to track their resources consumed during production and the distribution of various services or goods they provide to consumers is called the cost accounting system. Job Order Costing this is a cost system that is used to accrue costs on jobs that are considered to be groups. This job costing method is employed when distinctive production centers and departments work on a variant of products as appose to one main product during a specific period of time. Process costing is a category of costing system that is used for production of small alike, low-cost items. Activity based costing (ABC) is aimed in assigning costs to activities. This process has become more popular since the intricacy of businesses continues to grow and which increases their need to assign progressively larger indirect costs to appropriate departments or actives.

Cost Accounting Systems

The systems and techniques used in the accounting process by organizations which allows them to track their resources consumed during production and the distribution of various services or goods they provide to consumers is called the cost accounting system. These are regarded as tools that are used by management to help evaluate staff performance. These tools help in the managing of staff and resources efficiently, while also providing the tools needed for external reporting requirements in regards to balance sheets and income statements. Job Order Costing, Process Costing and Activities Based Costing are the three main cost accounting systems. These systems are designed to meet the needs of specific industries and companies. Following are two different industries this writer used to show the importance of the costing process.

In the hospitality industry cost accounting systems help effectively attain the following management points:

• Measuring the many needs and produced revenues of departments

• Monitoring and governing the growth of each department

• Department associated data collected is used to estimate costs and make appropriate adjustments and alterations in operating procedures.

In manufacturing and service businesses the main objective of cost accounting systems help attain the following management objectives. They afford the managers with supportive information about planning, cost control measures and shaping unit production costs. In many situations manufacturing companies use a comprehensive job cost sheet which contains Cost Summary and Unit Cost data since manufacturing