MANAGEMENT ACCOUNTING PROJECT

Methodsof payment of remuneration 11 treatment of

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Methodsof payment of remuneration. 11
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Treatment of items like interest on own capital, rent of premises owned, etc Method of working out depreciation, i.e, whether straight line method or written down value method to be used. Method of apportionment of service departments costs to production departments. System of classification and codification of cost accounts. Method of valuation of work in progress. The method of presentation of data and reporting to management. Treatment of under/over absorbed overhead, eg. Applying supplementary rate or write off to profit and loss account. For successful implementation of uniform costing system, it is the primary duty of a Trade Association of devise a cost manual containing recommended cost accounting plan. All the participant members should be invited for detailed discussion before a cost manual is finalised. The cost manual is of immense help in guiding the participating firms to operate their accounts on uniform basis. If the industry consists of companies of similar size and a common 12
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range of products, it is entirely feasible to present the accounting procedure in one manual for use of all members. Where, however, there is a great disparity in size of companies in an industry, it is better to issue a separate manual for large companies and one for the small. The characteristics of a good uniform cost manual are summarized below: It should present a strong case for the desirability of using uniform cost accounting methods. It should serve as a comprehensive reference book on cost accounting procedures. It should be useful to the executives/cost accountants for saving all problems in installation and execution of recommended uniform costing method. Introduction Statement of objectivesand purpose of the system. Education the management and people about the uniform costing system 13
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Scope of the system. Case for use of the system. Organisation Organisation for developing and operating the system. Stages in which the system is to be introduced. Management of the organisation by trade association or otherwise. Accounting system General principles of accounting to be adopted. Terminology to be followed. Details of coding system. Classification and description of accounts. Reconciliation between financial accounts and cost accounts. Accounting period. Method of costing [e.g. process costing, job costing, standard costing.] Unit of production. Costing periods [e.g. monthly, quarterly, half-yearly or annual] Expenses to be considered in costs. Methods to be used for inter-unit transfer pricing. Classification of departments [Production department, service department, etc.] Material cost – direct and indirect, treatment of idle time, treatment of fringe benefits, overtime, production bonus.
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