Accountant Search

A Few Important Cost Accounting Cases

Cost accounting is one of the most important types of accounting that is done in the organizations. A type of accounting that primarily deals with the preparation of the budgets of the organizations as well as in calculating the actual costs of the operations that the organizations spend on. It is also very helpful in determining the processes that are loss making as well as those that are making profits and thus need more attention from the management. Cost accounting branched out as a separate field of accounting particularly in the industrial age when the factory owners needed to keep a tack on the movements of their finances and control the entire organizations.

Some cost accounting cases that are of great relevance are:

  1. The second major advancement in the field of cost accounting happened in the aftermath of the Second World War. The impact of the Second World War on the cost accountancy in the US had both its positives as well as negatives. The most positive impact of the war was the increased awareness among the people about the costs. This was most evident in the companies that served as the military contractors. The reason behind it was that these companies had to present a full representation to the contracting agencies to get the reimbursements. The negative impact was that the dislocation of wars and the shortage of production as well as the capacity constraints led to the abolition of the scientific management techniques as they existed before the war.   
  1. A study was conducted in Sweden concerning the cost accounting in the customized tours in travel industry. The cost accounting theories used in the study were direct costing; full costing as well as activity based costing. While using the earlier methods the companies calculated the actual costs of the customized tours by summing up the tour’s direct costs and by adding a margin that incorporated indirect costs and the profits. The study suggested that the company adopt full costing with time as cost driver and allocates indirect costs for different tours.
Cost accounting cases need to be studied in order to get a clear picture of how the cost accounting developed and acquired its present form. The cost accounting cases also makes sure that the companies can decide about the cost accounting method that would suit them.