Cost Accounting Systems
Qiana.Reynolds
costing_accounting_systems_version_1-1.pptxCosting Accounting systems
ACC/561
Dr. James Sullivan
Mark Cox, Lee DeVaughn, Qiana Reynolds, Andrew Rice, Sheri LeBeau
November 21, 2016
Consider the places of employment of the team members or businesses with which the team is familiar and the industries in which they operate.
Create a 12-slide presentation, including detailed speaker notes that act as the script of the presentation or a voiceover, of an analysis of cost accounting systems. Include the following in the presentation:
Describe the purpose and elements of an effective cost accounting system.
Job Order Costing- This costing method is best used when each product used is significantly different than each other. Process Costing- Cost method that views the manufacturing process as a whole. Costs are assigned to products, and are lumped in to a large batch hybrid Costing- Costing method used when both the products are handled in groups like in the job costing method, and also when accumulating labor and overhead costs.
Job Order Costing, Process Costing, and Hybrid Costing
Job Order- Typically used in construction and hospitals Individual Inventory items are traced by product costs When a product is ordered, that is when the product is made Records are maintained for each individual job and product
Process Costing- Best utilized for identical low cost items, Cost is traced as overall vice individual products
Makes it easier to see what total production costs. Divide total cost by total number of units produced.
Hybrid Costing- Mixture of both Job order and process costing, Materials are charged to batches
Labor and Overhead are charged to batches. Best utilized when both costing methods are needed.
Clive Goulden, Louise Rawlins, (1995) "A hybrid model for process quality costing", International Journal of Quality & Reliability Management, Vol. 12 Iss: 8, pp.32 - 47
4
Determine when and why it is appropriate to use each type of system and include an explanation.
| Job Order Costing | Process Costing | Hybrid Costing |
| Job, Materials, Labor | Costs done by Factory | Automobile Makers |
| Construction Work | Costs are put into batches before being charged | Custom Items |
| Individual Hospital Jobs | Cost as seen as one expense | Combines both the Job Order and Process Cost systems. |
The Job order Costing system would be best utilized in an individual cost system. Construction work is a good example, The jobs are usually individual jobs and each part and labor and overhead are separate expenses. Here the best system is being used.
Process costing system is best utilized when the products are the same. If there is no need for deviation, the best possible costing system would be something that allows for large numbers of manufacturing and cost systems
The Hybrid method is used best with custom jobs. Take Harley Davidson motorcycles. There is a basic frame that the motorcycle company uses on most of their bikes, but when a customer orders the bike there is the option to custom the bike to fit your own specs. Since there is elemnets of each costing system, the hybrid system will come in to play here.
-------Hansen & Mowen, Cost Management, accounting and Control, South-Western, 3rd Edition (textbook)Cost Accounting: A Decision Emphasis (Fourth Edition) by Boer, Ferrara, Jeter, Steedle, & Pineo Dame Publishing
5
Recommend the best accounting system for the team members' respective places of employment or a business where they are interested in pursuing employment. Provide a rationale for the recommendations. If not enough information is available for all companies, provide suggested considerations needed to make the determination.
7
Resources
Hansen & Mowen, Cost Management, accounting and Control, South-Western, 3rd Edition (textbook)Cost Accounting: A Decision Emphasis (Fourth Edition) by Boer, Ferrara, Jeter, Steedle, & Pineo Dame Publishing
Clive Goulden, Louise Rawlins, (1995) "A hybrid model for process quality costing", International Journal of Quality & Reliability Management, Vol. 12 Iss: 8, pp.32 - 47
Kimmel, Accounting, 6e
