Vanderbeck- Chapter 1

Principles of Cost Accounting, 16th Edition, Edward J. VanDerbeck, ©2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Chapter 1

Introduction to Cost Accounting

Learning Objectives

Explain the uses of cost accounting information. Describe the ethical responsibilities and certification requirements for management accountants, as well as corporate governance.

Learning Objectives (cont.)

Describe the relationship of cost accounting to financial and management accounting. Identify the three basic elements of manufacturing costs. Illustrate basic cost accounting procedures. Distinguish between the two basic of cost accounting systems. Illustrate a job order cost system.

What is Cost Accounting?

• Cost Accounting provides the detailed

information that management needs to control current operations and plan for the future.

• Management uses this information to

decide how to allocate resources to the most efficient and profitable areas of the business.

Types of Businesses that use Cost Accounting

• All types of business entitiesmanufacturing, merchandising, and service businesses-require cost accounting information systems to track their activities.

• Manufacturers convert purchased raw

materials into finished goods by using labor, technology, and facilities.

Types of Businesses that use Cost Accounting

• Merchandisers purchase finished goods

for resale. • For-profit service businesses, such as health clubs, accounting firms, and NHL hockey teams, sell services rather than products.

Types of Businesses that use Cost Accounting

• Not-for-profit service agencies, such as

charities, governmental agencies, and some health care facilities, provide at little or no cost the user.

The Nature of the Manufacturing Process

•...