The impact of automation on accounting for indirect costs

Article Abstract:

A survey of 112 manufacturing corporations sought to identify the current cost accounting practices followed by these firms, in order to determine whether such practices provided management with the information needed to make informed business decisions and whether such cost accounting practices could be automated. Of the respondents, 66 percent use standard cost accounting methods and inventory valuation methodologies were fairly evenly split between last-in, first-out methods and first-in, first-out methods. Apparently, cost accounting methods vary widely from one manufacturer to the next in terms of allocating overhead on other than a plant-wide basis, a product category basis, departmental basis or allocations based upon both fixed and variable costing rates. It is suggested that high-tech manufacturing techniques (such as CAD-CAM) may not be as effective as they should be, if they are combined with old fashioned cost allocation methods that preclude the proper identification of the most economically beneficial product mix.

Accounting and auditing, Accounting, Technology application, Overhead costs, Direct costing

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Activity accounting: an update - part 2

Article Abstract:

Activity-based costing systems can provide solutions for product cost distortions commonly associated with traditional systems. Unlike traditional systems, activity-based costing systems use a two-stage process featuring traces on resources to cost pools in activity centers, and then from cost pools to products. The two-stage system allows for the use of different resource consumption measures at each stage, and gives system designers more leeway.

Research

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