Accounting department cost drivers

 · In some accounting systems, cost drivers are almost irrelevant in determining the contribution. Traditional costing systems allocate manufacturing overhead by dividing total indirect costs by a cost driver to obtain one rate to be used to allocate overhead to different www.doorway.ruted Reading Time: 7 mins. Analysts have selected the following cost drivers: customer accounts maintained, and number of paychecks processed. The cost data and cost drivers for 16 Question: Chapter 11 P1: The accounting department of Insecurity Protection Services, a company that provides security services for rich, famous, and insecure people is analyzing the costs of its accounting services. By using departmental overhead rates, we have the flexibility to use a different activity or cost driver for each department. Some departments rely heavily on manual labor but other departments rely heavily on machinery. Direct labor hours might been a good indicator of cost in some departments but machine hours might work better for others.

To begin the determination of appropriate cost drivers, an accountant analyzes the activities in the product production process that contribute to the cost of that product. An activity is any action that consumes company resources, such as taking orders for a product, setting up machines to produce the product, inspecting the product, and providing customer support before and through the order process. By using departmental overhead rates, we have the flexibility to use a different activity or cost driver for each department. Some departments rely heavily on manual labor but other departments rely heavily on machinery. Direct labor hours might been a good indicator of cost in some departments but machine hours might work better for others. In activity based costing method, to identify cost drivers is very necessary for unit cost and total cost. We know that activity-based costing is based on the concept that products consume activities and activities consume resources. From activity pools, we can find cost drivers. Suppose, a company wants to produce several products.

Historical cost accounting is a well-established method of accounting all over the world because it is able to meet the legal requirements for financial reporting. Historical cost accounting has been able to provide information about the fi. Accounting is a practice that dates back centuries. Luca Pacioli, an Italian mathematician from the 15th century, is known as the "father of accounting." He developed the bookkeeping system of accounting still used today, known as the doubl. Launching a start-up is an exciting opportunity. Determining the costs of launching a start-up begins with knowing the factors on which to base your estimates. Use these guidelines to help you figure out your business start-up costs. A very.