Posted: May 9th, 2017

Objectives of a cost accounting system

Objectives of a cost accounting system

What are the major objectives of a cost accounting system in a manufacturing company?

Solution:
There are 2 most important management objectives: to make available managers with useful in sequence for planning and cost be in charge of functions and to settle on unit manufacturing costs. A manufacturing corporation usually uses an accomplished job cost sheet which contains a Cost Summary and Unit Costs. This contain the total and unit costs of the following:

Direct materials is the raw material utilized in production whose cost or expenses are directly identify or traceable to the products manufactured

Direct labor is take-home pay and other payroll costs of workers whose efforts are directly perceptible to the products they contrived Manufacturing overhead is a catch all classification, which includes all manufacturing costs other than the costs of direct materials and direct labor.

Sue’s Soup Products uses a process costing system with two processing departments: the Mixing and Cooking Department and the Canning Department. Work in process inventories are reduced to zero each month. In March, the Mixing and Cooking Department incurred manufacturing costs of $63,000 to mix 42,000 gallons of soup. The Canning Department incurred manufacturing costs of $9,000. A total of 170,000 cans of soup were transferred to the finished goods warehouse during the month.