Cost Accounting Project

Only available on StudyMode
  • Download(s) : 32
  • Published : March 4, 2013
Open Document
Text Preview
[Type the document title]

[Type the document subtitle]

[Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.]

compaq
[Type the company name]
[Pick the date]

Contents
Concept of Cost Accounting……………………………………………………………………03 Introduction……………………………………………………………………………………..03 Traditional costing v/s activity based costing…………………………………………………..04 Need for an Activity Based Costing……………………………………………………………06 Stages in Activity Based Costing……………………………………………………………....08 Cost Drivers…………………………………………………………………………………….09 Classification of activities………………………………………………………………...……10 Steps Involved in the Implementation of Activity Based Costing……………………………..11 Working Example……………………………………………………………………………...13 ABC and the Service Sector……………………………………………………………….…...15 Important Factors in ABC Implementation…………………………………………………....15

Advantages of using ABC……………………………………………………………………...16 Uses & Managerial Applications of ABC……………………………………………….……..17 Demerits & Limitations of ABC………………………………………………………....…….19 Practical industrial implementation of ABC………………………………………….....……..21 1. Keshari and co………………………………………………………………..…..…….21 2. Cosmas Pharmacls……………………………………………………………...….…...24 3. V.A. Valves……………………………………………………………….….…….…..26 4. Deltron……………………………………………………………………………….…29 Activity Based Budgeting……………………………………………………………..……......31 Principle of ABB…………………………………………………………………….……...….31 Process of ABB………………………………………………………………………,…...…....31 Advantages of ABB……………………………………………………………………….…...32 Disadvantages of ABB…………………………………………………………………....…....32 How ABB is different from ABC……………………………………………………………...33 References………………………………………………………………………………………34 Concept of Cost Accounting:

Cost Accounting can be described as the process of accumulating, measuring, analysing, interpreting and reporting cost information that is both useful and relevant to the internal and external stakeholders of a business entity. External stakeholders are those who have a vested financial interest in a business or company. For example banks (loans), financial houses (mortgages), investors (investments), etc. Internal stakeholders are the business or company directors, managers, division heads, etc. Cost accounting information is designed for managers. Since managers are taking decisions only for their own organization. Cost accounting information is commonly used infinancial accounting information.  The cost-accounting system is the result of decisions made by managers of an organization and the environment in which they make them. Te companies tries to have the maximum profit ,for this they require to know the cost of product and expenditure incurred for decision making. So there are different approaches for taking decision in cost accounting: * standardized or standard cost accounting

* lean accounting
* activity-based costing
* resource consumption accounting
* throughput accounting
* marginal costing/cost-volume-profit analysis

We are here discussing in detail Activity Based Costing approach. Activity-based costing (ABC) is a special costing model that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing models.

Introduction:
Highlighting the limitations of traditional costing systems in overhead cost allocation in a situation of product diversity and in terms of volume and complexity, Cooper (1988) illustrated the need for activity-based costing systems. Consistent with this research, Cooper (1988) found that the firms facing a high level of competition and having a diverse product mix are more likely to benefit from...
tracking img