Manufacturing Cost Accounting
cost accounting refers to the process of gathering, maintaining and
reporting product and plant costs. Every plant
uses it no matter how small the operation is, however, some plants use
it very informally.
System and Cost Maintenance:
- Normally a plant will have MRP (manufacturing resource
planning) software to run the cost system. This
system also runs the entire plants information needs.
- The Cost Accountant either reviews or maintains
the costs in the system. These costs are:
- Usually the materials department will maintain
the bill of materials (BOM). The BOM contains all the
purchase costs and amounts of material for each part.
- The direct labor is collected from time cards.
Either the direct labor employees or a clerk will enter the
time into the system.
- The burden costs are labor and plant
costs that the Cost Accountant allocates to a job or product.
- Management requires many different cost reports
so they can make informed decisions.
- The Cost Accountant creates reports from the
system. She will also create many unique reports as required.
- The cost reports will be used to:
- Notify Management of production problems.
- Help cost efficiency efforts
- Be used as a guide to bid on new work.
- Be used for budgeting and business plans
Manufacturing cost accounting can be the most difficult of all
accounting, due primarily to the large amount of data that is collected
and because of the requirement for detail needed for cost