Why quality costs are important

Article Abstract:

Cost accounting methods that were developed when manufacturing was labor-intensive have become increasingly inadequate. The economic growth of non-manufacturing services, greater consumer interest in quality, and technological changes have created a manufacturing environment in which indirect costs and fixed costs have increased, labor costs have become more fixed, and the proportion of labor costs to total production costs has decreased. Cost accounting, with its emphasis on reporting costs, has been replaced by cost management, which emphasizes understanding and controlling the activities that incur costs.

Quality control

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Are you distorting costs by violating ABC assumptions?

Article Abstract:

Activity-based costing (ABC) systems can only be adjudged as being superior to volume-based systems if a number of assumptions that are typically evaluated before ABC are also considered superior. Should these assumptions not be met by the data used, then ABC costs may be no more reliable than those obtained using volume-based systems. Two such assumptions that must be met before ABC systems can be used are: that costs be driven by highly correlated activities and that costs vary proportionally with each activity.

Costs, Industrial, Industrial costs

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New rules for inventory costing

Article Abstract:

Inventory accounting for income tax purposes will be changed by the Tax Reform Act of 1986. Under the new law, additional costs to inventory must be capitalized. Product costing will be more complicated after the Tax Reform Act, because additional indirect costs must be capitalized, and costs that were previously treated as expenses, such as costs of service departments, must also be capitalized. An illustration of the data and the calculations needed to perform inventory costing under the new law is provided.

Tax accounting, Inventories, Inventory accounting

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