Factors To Consider When Designing A Cost Accounting System

May 15th, 2008 Comments off
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In order to have a good Cost Accounting System, during the stage of designing it, we should consider the following:

  • The need to have a thorough understanding of the Organization structure, manufacturing process & procedures, selling and distribution process and types of cost information required by the company’s business
  • The need to select a suitable costing technique re: standard or actual or marginal or absorption cost. The costing technique should conform with the normal industry standard that the business is in.
  • Plans need to be formulated to ensure
  • propose collating, allocation and absorption of overheads
  • suitable method for booking labour costs on jobs
  • proper methodologies to treat waste and scraps
  • Relevant forms need to be design to ensure the collection and dissemination of cost data/information
  • To consider the need to have budgetary control technique so that actual performance can be compare with budgeted figures and variances being properly analyze to enable management to make correct decisions.

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