Cost Accounting Essays

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Accounting Is the Basic Function Essay

Words: 1515 Length: 5 Pages Document Type: Essay Paper #: 74934849

Yet, financial statements and managerial accounting reports can be highly effective nonetheless. Sometimes they will merely confirm what the proprietor already knows, but there are inevitably going to be times when they will reveal that the proprietor's assumptions about the nature of the business are false. Moreover, accounting can act as essentially a second opinion. The proprietor may feel one thing is true, but the numbers can reveal something different.

Overall, accounting is an essential component of any business. Sole proprietorships often make less use of accounting, in part because the law does not obligate them to engage in any more than the most rudimentary accounting. However, proprietors should not overlook the value of accounting. Accounting helps to reveal the business' past performance, but can also be used to enact organizational controls today and to help plant for more effective operations in the future. By understanding the firm's cost structure and revenue streams acutely, a sole proprietor can make the best decisions possible. Thus, accounting is an essential component of even the smallest of businesses.

Works… [Read More]

Marshall, David H.; McManus, Wayne W & Viele, Daniel F. (2008). Accounting - What the Numbers Mean. McGraw-Hill/Irwin, New York, 2008.
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Accounting History Accounting Texts Were Essay

Words: 1149 Length: 4 Pages Document Type: Essay Paper #: 73553193

Wood was used more for recording, ink and seals were used to write accounts on top of a piece of wood. It was used mostly by everyone as it was inexpensive plus it was very easy to write on top of it. Marked stick also played many roles, also known as counting tally. But in fourteenth century, there was an argument for a decline in tallies and to increase the use of paper which was found in England. Still this was an expensive import, in a result tally remained there for many years along for efficient calculation's an abacus was used.

By 1700, few professional accountants were found in Scotland for the Italian method of book keeping. But by 1800 there were many professional accountants who were operating in the major Scottish towns as the knowledge of accounting became even more common in the business community. The notable accountants were used to write clear exposition of the Italian method of book keeping and showed many techniques as well. In 1768, work progressed even more by the source of applications and funds. Transactions on credit were curtailed as the new receipts were made and payments were made from the Royal Bank of Scotland. New system for corporate and cash accounting were also emerged. Historical accounting has been focused on manorial accounting which was appeared in the middle ages and double entry bookkeeping which was there for over 700 years. It was not only adopted for various purposes but also for the government in different localities or countries. At the end of the eighteenth century, accounting was represented by over fifteen thousand separate organizations. They used to collect money, pay money, borrowed it, spent it and used to produce accounts which were not common until nineteenth century. In nineteenth century, government accounting system went through a serious strain. Mechanisms of the markets were familiar and disrupted at the time because of an unexpected war for the expansion of government in trading and manufacturing. Accountants of the government not only had accounts to Parliament for taxpayer's money but also to lessen the unfamiliar tasks including fixing prices and profits…… [Read More]

Basil Selig & Robert Henry. "Accounting History: Some British Contributions" 1994.
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Accounting Ratios the Financial Statements Essay

Words: 2089 Length: 5 Pages Document Type: Essay Paper #: 78170223

An unaware analyst may think the second company to be better but in reality its low encouraging level is due to the fact that it is unable to secure additional funding. The companies may possess different capital structures and to attempt comparison of performance when one is all equity financed and another is a geared company may not suffice for a good analysis. The chosen application of government incentives to several companies may also twist the inter-company evaluation. There may be the possibility of providing a company with the tax holiday while the other within the same line of business not, and evaluation of such two enterprises may be misleading. (Session 15: Limitation of Ratio Analysis)

As a matter of principle, the accounting strategies are required to be applied persistently. Changes are required to be emphasized and the influence of variations from an original policy revealed. This is applicable when calculating and interpreting ratios. The progress in the performance of the company cannot be found out if the published accounting figures are manipulated so as to generate favorable results. However, the benchmark comparisons against other companies in a sector may be problematic taking into consideration the flexible opportunity provided by the Statements of Standard Accounting Practice -- SSAPs and Financial Reporting Standards -- FRSs. As an illustration of such flexibility, under SSAP 13, Research and Development, companies may within particular confinements choose to capitalize development expenditure, as a substitute to charging this expense to the P & L. account. One firm may perform this and skip the P & L. account in particular years while another may not. This will have tremendous impact on the performance ratios and making conclusions on the way the company compares against its competitors becomes more difficult. (Ratio Analysis)


Accounting ratios are a significant tool applied by accountants and others for representing accounting statements. The analysts are…… [Read More]

Accounting and decision making - Ratio analysis. Retrieved from Accessed on 22 April, 2005

Basic Financial Statement Analysis: Objective 3: Explain the limitations of ratio analysis. Retrieved from Accessed on 22 April, 2005
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Accounting Differential Cost Differential Cost Strategy When Essay

Words: 1151 Length: 4 Pages Document Type: Essay Paper #: 19421400


Differential Cost

Differential Cost strategy when used by an educational entity such as UOS means that the institution determines what it would cost to offer alternative forms of education based on the number of students interested in choosing those alternative forms. In other words, by offering choices to the students based on the student's specific needs and desires and then measuring the difference in cost when compared to other educational offerings, the school will know exactly what the differential cost is. This allows the school to offer courses and activities in the most efficient and effective manner, and in a manner that produces the highest amount of revenue with the lowest cost. By knowing the difference between the school's offerings and what the same type of offerings are being offered by their competitors, the school will be capable of offering more for less. As an example, if the school decided to offer a computer course that drew 40 students paying $500 with a cost of $2,000 compared to offering a English course that drew 50 students paying $500 with a cost of $2,000 the differential cost is a positive $5,000 for the English class. The school would then know to offer the English class over the computer class.

Major activities and activity cost pools

The major activities at UOS include the following; teaching, the Center for Continuous Education, and student registrations and admission services. Additional activities that are evaluated as to their cost includes such items as Human Resources, Maintenance, Computer Services, Transportation and Facilities. Teaching, of course, is the mainstay of the institution. Without good teachers, the school suffers; loses students and revenues, and could possibly lead to a downward educational spiral from which the school never recovers. Therefore, hiring and keeping good teachers is very imperative to the success of the school. The Center for Continuous Education is also very important in that it provides comprehensive information and guidelines to students in search of educational success. Student registration and admissions are also major activities in that they facilitate the efficient generating of revenue by ensuring the course offerings match the desires of the majority of students interested in attending the school.

The cost pools for the three primary activities include 3,500,000 for teaching, 500,000 for Center for Continuous Education,…… [Read More]

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Costing the Analysis Is Based Essay

Words: 2854 Length: 10 Pages Document Type: Essay Paper #: 67582377

Dibsa should turn towards the market-based pricing strategy, which sees the implementation of competitive prices for the 3-in-1 Lawnmower. The selection of this combination of strategies would generate several impacts upon the company, but most of them would be obvious at product lifecycle level. In this order of ideas:

The sales revenues would be significantly high throughout the first six months and they would allow the company to cover for the large costs incurred in the manufacturing of the product as well as register profits; they would however decrease with the implementation of the market pricing strategy and the 3-in-1 Lawnmower would metamorphose from a star product into a cash cow

The costs incurred in the manufacturing of the new lawnmower have already begun to decrease and will continue to do so; the actual impact of the pricing strategy is limited, with the specification however that these costs will not be allowed to increase over an imposed limit, pegged to the retail price and the expected sales

Profits would be increased throughout the first six months, but will then decrease; the lower profits will however be more sustainable in the future as they will be based on a solid product that attracts customers through quality and functionality, rather than the element of novelty

6. Absorption and Marginal Costing

The stands of specialized economists on the issue of absorption and marginal costing vary. For instance, some argue that absorption allows the organizations to set prices which reveal the maximum utility of the product, whereas others argue that the utility revealed through absorption is the expected, not the maximum one (Hilton, Swieringa and Turner, 1988, p.196). Aside the utility revealed, absorption costing is generally characterized by the fact that it includes all manufacturing costs and sometimes all, or part of the overheads, in the final cost of the product and it does this with the aid of overhead absorption rates. Marginal costing on the other hand assigns only the variable costs to products (BPP Professional Education). Given the situation at Nippers and the previous recommendation towards a skimming pricing strategy continued by a market oriented retail policy, it is at this stage advisable for Mrs. Dibsa to select the marginal costing system for the reason that it allows her accountant to selectively integrate the costs in the…… [Read More]

Berman, K., Knight, J., Case, J., 2006, Financial Intelligence: A Manager's Guide to Knowing what the Numbers Really Mean, Harvard Business Press

Bolander, S.F., Gooding, C.W., Mister, W.G., 1999, Transfer Pricing Strategies and Lot Sizing Decisions, Journal of Managerial Issues, Vol. 11
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Costing Process V Job Costing Essay

Words: 649 Length: 2 Pages Document Type: Essay Paper #: 42204177

Another example of pure job costing is web development, where the processes themselves vary hugely from project to project, meaning the cost and time involved also varies.


Dosch & Wilson (2010) do seem to do a good job of defining job and process costing, and the person who posted this seems to have understood these definitions fairly well in the abstract -- that is, the definitions provided seem reasonable and the application of these definitions to businesses chosen by the poster are explained in a way that clearly links them to these definition. At the same, the poster seems to have had some trouble accurately identifying companies where job costing might be employed, despite grasping the abstract technicalities of the definition of job costing. While it is likely that an individual laborer might be able to identify that they worked on a particular section of an airplane or wall of a mobile home, thus tying labor to specific products and making job costing seem a likely choice, it is also highly likely that these laborers repeat exactly the same tasks day in and day out, and that over the course of a year they manufacture many of the exact same type of airplane or mobile home. A factory that churns out mobile homes probably uses the same design or designs, with the same material and a set number of hours needed to complete each home, making process costing more effective. The same is true for airplanes.… [Read More]

Chan, Y. (1993). Improving hospital cost accounting with activity-based costing. Health care management review 18(1).

Dosch, J., & Wilson, J. (2010). Process Costing and Management Accounting in Today's
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Accounting for Decision-Making Essay

Words: 2947 Length: 10 Pages Document Type: Essay Paper #: 40031651

Accounting for Decision Making

Shelter Partnership's Case Study

Purposes of Cost Information

The intended purpose of cost information is to provide a basis for determining the expenses and revenues associated with a particular activity (or cost object). Generally, cost and income is measured in order to determine net income or profit margins. However, as Shelter Partnerships is a non-profit, the cost information forms a basis for the allocation of resources and to assist with decisions about scaling. The cost information of Shelter Partnerships can also be used to address any cycles in the stream of donations and contributions that can impact the overall ability of the non-profit to meet its mission. In addition, since Shelter Partnership regularly applies for grant funding, it is essential that their accounting system be readily interpretable to grant reviewing bodies. Fund development cannot be sustained for long in an environment that is only loosely accountable for revenue -- in fact, this is one of the public's most common criticisms of not-for-profit organizations, and it is often their undoing (or at least that of their executive directors). Shelter Partnership must ensure that their books provide an accurate accounting of all operational expenditures and all funds received -- regardless of the source (including "in-kind").

Cost Objects

Shelter Partnership cost objects. The cost objects for the Shelter Partnership include the technical assistance work, the program development work, and the public policy support work. Each of these cost objects has a discrete focus and cost should be separately measured for those objects (Averkamp 2011).

Shelter Resource Bank cost objects. The cost object for the Partnership Shelter Resource Bank consists of the direct material assistance to the homeless shelters.

Where over-head and administrative costs are shared, the percentage of costs should be allocated to the objects according to use or consumption (Averkamp 2011).

Accuracy of Ruth Schwartz' Estimates

Schwartz did not organize the financial accounts separately for the Shelter and the Resource Bank,…… [Read More]

Prestige Telephone Company (2004) [Course Notes ] AIM 4343 Retrieved
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Accounting Profession Towards a More Essay

Words: 3151 Length: 10 Pages Document Type: Essay Paper #: 57289159

However, when a shock happens that changes that pattern, the information is no longer relevant. In periods of turmoil, only the most up-to-date information is relevant. The usefulness of the information wanes quickly as the behavior of the company becomes more erratic. After a period of erratic behavior and change, the company may be forced to make internal changes that affect the way they do business. They may make changes that affect their inventory management, sales cycle, stock levels, supply chain, distribution network or other fundamental business functions. New patterns may emerge and the old information no longer applies.

The term "relevancy" can have many different meanings depending on what is happening with the company. A new accounting regime may need to be instituted when a change takes place. Looking at the most recent historical information is one way to determine the relevancy of the accounting information. The analyst needs to look for patterns and cycles, as long as the cycles appear to be consistent, the information could still e considered relevant. Another source of information to help determine the relevancy of the accounting statement is company news. One could monitor the company news to determine if there have been any stories about events that could affect the relevancy of the information in the financial statements.

Like the task of accounting itself, determining the relevancy of the accounting statement itself is an art. Many beginning investors skip the question of relevancy and timeliness. This leads to dangerous assumptions. It is easy to focus on historical patterns and the statements contained in the forward-looking statement, but in order to make the best decisions, investors need to ask themselves, not only what the information says, but how relevant it is to the current financial situation of the company. Information that was relevant to stocks in GM and Chrysler ten years ago, are no longer relevant…… [Read More]

Cadwalader, Wickersham, & Tact LLP. 1999. Application of the Safe Harbor for Forward-

Looking Statements. Findlaw. Accessed April 23, 2009
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Accounting CVP Analysis for Snap Essay

Words: 610 Length: 2 Pages Document Type: Essay Paper #: 56411415

It is known that the membership fee is $26. Using this, the variable cost per member can be calculated, as shown in table 2.

Revenue per member (a)


Fixed costs per member (b)


Variable cost (a-b)


If the membership fee is $26 per member, the membership fee, less the fixed cost (at the break even point) will give the variable cost per member.

The information in tables 1 and 2 can be used to assess the number of membership the Snap Fitness will need to sell each month if they wish to make a profit of $10,000 per month. As seen above, it is the contribution per unit that will initially pay for the fixed costs and then the profit. To calculate the sales needed for a predetermined profit level, the required profit should be added to the fixed costs. That total may then be divided by the contribution per members to give the number of memberships that need to be sold to achieve that level of contribution (Kinney and Raiborn, 2012).

Table 2; Memberships Needed for $10,000 Profit

Fixed costs (as in table 1) (a)


Target profit (b)


Total contributions to cover fixed cost and profit (a+b) (c)


Contribution per member (d)


Memberships needed (c/d)

Table 2 shows that for Snap Fitness to make a $10,000 a month profit they need to sell 800 memberships. Knowing the number of memberships need, and the total cost of membership can now be used to assess the total revenue that will need to be generated for a $10,000 profit. This is shown in table 3.

Table 3; Revenue for a $10,000 Profit

Revenue per membership


No. Of members

Total revenue


For Snap Fitness to gain a $10,000 on the cost figures provided, they will generate $20,800…… [Read More]

Works Cited:
Horngren, Charles T; Foster, George; Datar, Srikant M; Rajan, Madhav, (2008), Cost Accounting: A Managerial Emphasis, Prentice Hall

Kinney, Michael R; Raiborn, Cecily a, (2012), Cost Accounting: Foundations and Evolutions, South-Western College Pub
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Accounting Allows Managers to Better Essay

Words: 645 Length: 2 Pages Document Type: Essay Paper #: 50133555

d.). The methods by which this information is gathered will differ based on the type of production that is being undertaken. Cost flow assumptions relates to how costs flow through inventory accounts. This can include FIFO, LIFO, weighted average and other methods. This impacts the costs because it helps to determine which costs are counted for which period. Recording interval capability refers to the points in time when a company takes inventory. Many firms use perpetual inventory, but some firms will take inventory periodically in order to provide this information.

Overall, cost accounting systems provide the information that managers need with respect to the costs of a product. By using a specific system, wherein decisions about methodology are made about each of the five parts of the cost accounting system, the system will be consistent through different products and through different time periods for the same product. This will ensure that costs are not allocated twice, or have failed to have been allocated. It will also ensure that the costs are allocated consistently so that they can be compared. The purposes for which cost accounting is used -- keeping or cutting a product, placing production emphasis on one product over another, or making changes to the production process of a product -- all depend on having information that is reliable and comparable. Without that, the managers making such decisions will be at risk for making the wrong decision. It is important, then, that every company employ a cost accounting system that develops methods for gathering and compiling cost information.

Works… [Read More]

Kinney, M. & Raiborn, C. (2009). Cost accounting: Foundations and evolutions. Mason, OH: Thomson Higher Education.

Martin, J. (no date). What is a cost accounting system? Management and Accounting Web. Retrieved June 23, 2010 from 
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Accounting the Most Effective Means Essay

Words: 2730 Length: 9 Pages Document Type: Essay Paper #: 2716657

Systems of income and financial position would superimpose standards of normalization upon everyone within the firm. Accounting, thereby, had achieved Foucault's definition of knowledge as power over people per excellence. By the 1950s, however, person as decision-maker replaced this vision of person as machine, and accounting still has power in our society, but a different sort of power. Likewise, accounting still possesses its constructivism (i.e. manner of perceiving a certain stranglehold on reality by emphasizing certain construct and demoting others), although its constructivist paradigm may have differed from that of, say, a century ago. Individuals are viewed, measured, and criticized within programmatic frameworks, and Miller and O'Leary (1987) suggest that accounting today can still be viewed as part of the heritage and structure (albeit slightly changed) of the traditional mode of power that it was in the early decades of this century. In other words, the slanted domination of accounting remains.

Accounting as Form of Lens

The fact that accounting can be perceived as a subjective discipline that has its particular perspective and language is a view that is emphasized by Ezzamel, Lilley, and Wilmett (2004) who argue that accounting inscriptions serve as a certain form of hieroglyphic and semantic control via organizations over people.

Using the company Britech as an example, Ezzamel et al. (2004) demonstrated how writing as representation emphasized certain structures and processes whilst de-emphasizing others, and how all semantics and forms of writing (or speech) serve to do the same. Ezzamel et al. (2004) explored the option of alternate accounting measure and practices, accentuating the role played by human agency in these processes, before elaborating their understanding of the power of accounting inscriptions in human life. Britech, Ezzamel et al.'s (2004) case-study, in question, introduced a newer set of accounting standards that would reflect their new paradigm of environmental change.

In 1989, the managers of Britech decided that accounting would be extended to firstly incorporate new measures that would emphasize concern for quality and value; and secondly would extend these more detailed measures and to target them all across the board…… [Read More]

Armstrong, P. 2002, "Management, Image and Management Accounting. Critical Perspectives on Accounting, 13, pp. 281-295

Bryer, R. 2006, "Accounting and control of the labour process" Critical Perspectives on Accounting, 17, pp 551-598.
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Accounting Important Success Firm What Methods Cost Essay

Words: 960 Length: 3 Pages Document Type: Essay Paper #: 40102732

accounting important success firm? What methods cost accounting ? The paper (a) identify main issues chosen area, (b) reference learning occurred, (c) build class activities incidents facilitated learning understanding, (d) present specific current / future applications relevance typical workplace.

Cost accounting -- definition, importance, methods

The modern day society is constantly presenting the economic agent with more numerous and more pressing challenges. In order to face them and emerge as a competitive institution, firms develop and implement a wide array of strategies, such as creating customer value, developing the skills of the staff members, establishing strategic partnerships or creating financial stability and accountability. One specific means in this endeavor is represented by cost accounting, which represents a key to organizational success. The current project focuses on the identification of the reasons as to why cost accounting is important to organizational success. A secondary research objective is that of pin pointing several methods of cost accounting and revealing the means in which they are used.

The first step in attaining the previously mentioned research objectives is that of ensuring a clear and full comprehension of the concept of cost accounting. With this objective in mind, the following lines reveal some of the definitions as they occur in the specialized literature:

Finance specialized website Investopedia (2010) defines cost accounting as "a type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step of production as well as fixed costs such as depreciation of capital equipment." The editors continue to explain that cost accounting commences by individually assessing and recoding the totality of costs incurred and then comparing them to the final output, in order to reveal a true picture of the company's financial performance.

The Accounting for Management website (2009) defines cost accounting as "the process of accounting for cost, which begins with regarding and classifying of incomes and expenditures and ends with the preparation of periodical statements and reports for ascertaining and controlling costs."

The main usage of cost accounting is that of supporting the organizational managers in making informed decisions regarding budgeting, investments…… [Read More]

Pizzey, A., 1989, Cost and management accounting: an introduction for students, 3rd Edition, SAGE

2009, Cost accounting definition, Accounting for Management, last accessed on January 26, 2011
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Accounting When it Comes to Essay

Words: 1792 Length: 6 Pages Document Type: Essay Paper #: 80183848

When it comes to standard costing, what is referred to as a standard cost is assigned the costs (actual) of manufacturing overhead, direct labor as well as direct material. In this case, these costs are not assigned to a product. It therefore follows that amounts mirroring standard costs are what become identified first in regard to the cost of goods sold as well as inventories of a given manufacturer. In this case, it can also be noted that standard costing is regarded a rather important tool of management. Incase of any variance, the top leadership of the organization immediately becomes aware of the variation between planned/standard costs and manufacturing costs.


The information provided by cost accounting is critical when it comes to the effective management of an organization. Without such information, decision making would become an equivalent of operating in the dark for most businesses. For instance, firms would be rendered clueless in the determination of whether or not to continue the production of certain products. Cost accounting makes such endeavors relatively easy and less complicated. Thus as I have already pointed out in the introductory section, when it comes to the success of any given firm, the relevance of cost accounting cannot be overstated.… [Read More]

Brammertz, W., Akkizidis. L., Breymann, W., Entin, R. & Rustmann, M. (2009). Unified Financial Analysis: The Missing Links of Finance. West Sussex: John Wiley & Sons.

Drury, C. (2007). Management and Cost Accounting (7th ed.). London: Cengage Learning EMEA.