Cost Accounting Systems

Cost Accounting Systems

Introduction

Efficient operations management of the modern enterprise is impossible without a well-established system of management accounting and reporting at all levels of government. This paper presents an analysis of relative tradeoffs in assessing and utilizing cost accounting systems. It also presents a discussion on why cost accounting system approaches differ among nations do and how should companies approach the challenge of developing meaningful systems which are universally accepted.

Discussion

Management accounting is the process of identifying, measuring and comparing information; this allows managers of the company, using this information, to make informed decisions and plan activities of the enterprise (Aghili, 2011). If the account information is not conducive to making more informed decisions, then the cost of maintaining and implementing such systems is a waste of time and money. Managers must make decisions regarding the allocation of scarce economic resources of the enterprise. In order to justify their decisions, managers need management accounting systems data (Krumwiede & Suessmair, 2008). In recent years, conditions for the existence of enterprises have become more unstable due to increasing sophistication of buyers, rapid changes in technology, the global economy, and the increased volatility of financial markets. Under the influence of these changes, the role of cost accounting systems in the business has become more complex and demanding (Portz & Lere, 2010).

Cost accounting systems utilization includes the methods, procedures and resources used by an entity to take a control of financial activities and summarize them in a form useful for decision. Cost accounting information can be classified into two major categories that include:

The accounting or financial accounting outsourcing

Accounting costs or internal accounts

Majority of companies do not realize the transition to management by type of activity. A major organizational change is impossible without enormous preparatory work (Abdallah et al., 2008). The main obstacle in integrated ...