Aunt Connie - item, by direct or indirect allocations. In...

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Aunt Connie’s Cookies should implement a cost accounting system to determine their products costs. This process will allow Connie and Chief Operating Officer, Maria Villanueva to examine cost of production for regular and special orders, when making financial decisions. A cost accounting system has the following two processes: (1) Cost accumulation: Collecting costs by some “natural” classification, such as materials or labor, or by activities performed such as order processing or machine processing; and (2) Cost assignment: Attaching costs to one or more cost objects, such as activities, processes, departments, customers, or products.” (Horngren et al., 2008, p. 138). In other words, the cost accounting system will begin by gather data and classifying it by type, then assigning a different cost to each
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Unformatted text preview: item, by direct or indirect allocations. In order to implement a cost accounting system, Connie needs to decide whether to use the traditional cost accounting system, which only allocates production indirect costs, or the much more costly Activity-based costing system (ABC). ABC methods provide much more accurate information by assigning costs to activities based on actual usage. Horngren, C.T., Sundem, G.L., Stratton, W.O., Burgstahler, D., & Schatzberg, J. (2008). Introduction to management accounting (14th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. White, M. (n.d.). Job Order Costing. Retrieved February 24, 2011, from
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This note was uploaded on 07/18/2011 for the course ACC 561 taught by Professor Cole during the Spring '09 term at University of Phoenix.

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Aunt Connie - item, by direct or indirect allocations. In...

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