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

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

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 http://www.middlecity.com/ch17.shtml...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern