The Cost Accounting System

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Accounting researchers have argued that the development of cost accounting systems is associated with the development of the industrial sector. Earlier researchers argued that the Industrial Revolution, which happened in the eighteenth century, was the starting point for cost accounting systems (Garner, 1947; Mepham, 1988; Fleischman & Parker, 1991; Fleischman & Tyson, 1993; Ning, 2005). Connecting the development of cost accounting systems with the Industrial Revolution led to earlier researchers concentrating on the manufacturing sector’s cost accounting systems (Karmarkar, Lederer, & Zemmerman, 1989; Fleischman & Tyson, 1993; Cropper & Drury, 1996; Brierley, Cowton, & Drury, 2001; Fullerton & Mcwatters, 2004). A few researchers, such…show more content…
Typically, indirect costs were substantially less significance. Today’s modern manufacturing incorporates much greater automation. This has changed employee relations practices, and created few deterministic expenses. This fact has substantially altered the mix of direct and indirect expenses. As a result some of the preoccupation with manufacturing costs to the exclusion of other categories of expenses is increasingly inappropriate, as are certain of the traditional cost accounting procedures, particularly those used to absorb overhead into individual products and services. Charles Reitell (1933) stresses in its preface six aspects of cost accounting considered particularly important which are measuring and evaluating plant performance, control of overhead expenses, standard cost and budgets, managerial foremanship, distribution costs, cost…show more content…
Development of uniformity in the cost methods of various manufacturers in given industries. Improvement of factory administration through timely and adequate cost and financial reports. Martinson (1994) “Cost accounting is a part of internal management accounting and designed for providing information to managers to assist them in making decision”. Horgren (1990) stated in his cost accounting text book that: “Few costs are clearly under the sole influence of one manager. For example, price of direct material may be influence by a purchasing manager, where as quantities used may be influenced by a production manager”. P. A. Sharman (2003) “Cost accounting was designed with the explicit objective of supporting management decision making about which products or services to offer, how to price them, and how to plan and control operations”. Kinney and Raiborn (2009) “Cost accounting is an excellent approach to dedicating cost to single functions and operations”. Lucy (1988) “Cost accounting system of any organization is the foundation of the internal financial information system. Management need a variety of information to plan, control and makes decisions. Information’s regarding the financial aspect of performance is provided by the costing

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