Factors To Consider When Installing a Cost Accounting System

May 15th, 2008 / No comments yet

Some of the following factors to consider when installing a Cost Accounting system:

1.0 The objectives and expectations of managements for installing it should be identified. How simple or complex will depends on the objectives of management

2.0 The need to properly understand the nature of business, its technical aspects, products, process flow & methods and stages of productio

3.0 The study of the organization structure- its departments or division to determine the scope of responsibilities of the various executives/head of department/division

4.0 All the relevant parties/staff need to be involved right from the start until the date of delivery of the system

5.0 The details of the cost records should be carefully worked. Also the degree of accuracy of the data to be supplied by the system should also be determined

6.0 The costing system to be installed should be easy to understand and simple to operate

7.0 All the forms for example the recording workers’ costs should be standardized , consistent and preferably automated with minimum clerical intervention.

8.0 The need to have regular reconciliation of costs and financial accounts if they are maintained separately