Cost Systems

Description

Based on an example, this technical note describes the usual steps involved in designing a cost system. It introduces the typical elements in cost systems and explains how companies can use them to distribute and allocate the costs of resources to different objects. A variation on the same example also allows for illustrating activity-based costing (ABC). The final section analyzes the impact of capacity when it comes to assigning resources using a costing system.

Learning Objective

This note can be useful in any course on Management Accounting that includes a session on costing systems.

Related Documents

• Introduction to Managerial Accounting
• Introducción a la contabilidad de gestión
• Accounting for Decision Making
• Contabilidad para la toma de decisiones
• Variance Analysis
• Análisis de desviaciones

Keywords

ABC systems capacity Cost allocation Cost systems indirect costs