Cost Accounting
Assignment: Cost Accounting Applied
By
Professor Bryan Womack
Course Title ACC 350012VA016-1122-001 Cost Accounting
February 26, 2012
Companies that are successful financially know what their costs are and how those costs are being spent. The company I have chosen wants to change from a general accounting system where costs are put in general categories and they currently do not have any allocation of costs. I would like to explain the success my company could have when they implement using cost accounting in their operations.
Artis is a research and development company as well as a manufacturing company. Artis designs Active Protection Systems (APS) for vehicles. Their main purpose is to design and engineer a product that will protect vehicles from the threat of missiles. These Active Protection Systems are constantly being engineered and re-engineered as new threats and potential threats arise.
Artis has to research, design and engineer the product continuously. There developed different models version that can then be manufactured and sold based on the customer’s demand on the sale contracts. The major costs associated with the engineering of the Active Protection System are the costs of the labor (both labor spent on their facility and labor spent at government sites), the costs of the various specialized subcontractors, the costs of the materials and the indirect costs associated with those costs. The company needs to do several things relating to their engineering costs. They need to set up a job costing system in which each project is set up as a special job. Any costs that are directly associated with that job need to be kept track of by type. The only way for the company to know how they are performing on each of their sale contract is to develop a specific budget for those jobs. The project managers then have the responsibility of
By
Professor Bryan Womack
Course Title ACC 350012VA016-1122-001 Cost Accounting
February 26, 2012
Companies that are successful financially know what their costs are and how those costs are being spent. The company I have chosen wants to change from a general accounting system where costs are put in general categories and they currently do not have any allocation of costs. I would like to explain the success my company could have when they implement using cost accounting in their operations.
Artis is a research and development company as well as a manufacturing company. Artis designs Active Protection Systems (APS) for vehicles. Their main purpose is to design and engineer a product that will protect vehicles from the threat of missiles. These Active Protection Systems are constantly being engineered and re-engineered as new threats and potential threats arise.
Artis has to research, design and engineer the product continuously. There developed different models version that can then be manufactured and sold based on the customer’s demand on the sale contracts. The major costs associated with the engineering of the Active Protection System are the costs of the labor (both labor spent on their facility and labor spent at government sites), the costs of the various specialized subcontractors, the costs of the materials and the indirect costs associated with those costs. The company needs to do several things relating to their engineering costs. They need to set up a job costing system in which each project is set up as a special job. Any costs that are directly associated with that job need to be kept track of by type. The only way for the company to know how they are performing on each of their sale contract is to develop a specific budget for those jobs. The project managers then have the responsibility of
References: ABC. Jan Emblemsvag. Activity-Based Costing (ABC). http://www.emblemsvag.com/abc.htm Activity-Based Costing and Activity-Based Management. Strayer University. (2008). ACC 350 Cost Accounting 2008 Custom Edition. New York. Custom Publishing. Flexible Budgets, Direct-Cost Variances, and Management Control. Strayer University. (2008). ACC 350 Cost Accounting 2008 Custom Edition. New York. Custom Publishing. Inventory Management. R. Anthony Inman. Inventory Management – levels, system, model, type, business, system, what is inventory? http:www.referenceforbusiness.com/management/Int-Loc/Inventory-Management.html LIFO vs. FIFO: Understanding the Difference. Aunindita. LIFO vs. FIFO: Which One is Better for my Business? http://www.brighthub.com/office/finance/articles/81950.aspx Master Budget and Responsibility Accounting. Strayer University. (2008). ACC 350 Cost Accounting 2008 Custom Edition. New York. Custom Publishing.