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AC1203 COST ACCOUNTING AND CONTROL REVIEWERChapter 1- INTRODUCTION TO COST ACCOUNTINGCost accountingis the process of tracking, recording and analyzing costs associatedwith the products or activities of an organization.Jane Gleeson-Whiteis a writer, editor and speaker who has a PhD in creative writingand is well known for her work on literature, economics and the natural world.Main Objectives of Cost Accounting1.to ascertain costs of each product, process, job, operation or service2.to facilitate planning of activities or processes3.to control the costs of operation4.to serve as the basis in setting the selling price5.to assist management in decision makingto assist management in decision making.Functions of Cost Accounting Information System1.providing information for external financial statements2.planning and controlling activities or processes, short term as well as long-termstrategic decisions.Cost accumulation -is the collection of cost data in an organized way by means of anaccounting system.Cost assignment- is the assignment of direct and indirect costs to a particular costingobject.Cost tracing- assigning direct costs to a costing objectCost allocation-assigning indirect costs or common costs to several costing objects
Cost management- is the process by which companies plan and control the costs ofdoing business.Cost Accountants Task:1.to provide various types of information for external financial reports2.to supply the budget information3.to provide information about labor and benefit costs4.to estimate facility-wide budgeted costs5.to determine the profitability of individual customers, products, product lines, orfacilities6.to be involved in the assignment of costs to various entities7.to determine why costs have been incurred and allocated in a certain manner bytracing them back through the accounting system8.to be assigned to any number of cost-related projects as an internal consultant.9.to conduct a benchmarking study to find better ways to complete a task10.to assist in preparing legal justification for the company’s case and may even becalled on to testifyShown below are the examples of Cost Accountant’s duties andresponsibilities:• Prepare monthly journal entries manually or by initiating electronic creation throughour software program;• Review journal entries carefully for anomalies and other inconsistencies;• Prepare monthly and quarterly accounting reports for submission to management• Conduct inventory reserve analysis on a quarterly basis and generate reports forsenior management• Assist the Staff Accountant with suggesting changes to policies or procedures toincrease cash flow
• Review rates of depreciation, labor and overhead and suggest policy changes toimprove numbers• Classify costs accurately• Establish standard costs and update them as appropriate• Maintain and review the general ledger and reconcile balance sheets