Your team has been asked to present a proposal to management for developing a cost accounting system for the new online business unit of a merchandising company. Your final system must contain features designed to support the ability of both the new online business unit and the parent unit to measure the performance of the new business. When the project is implemented, your team will help develop the organizational strategy and manage the accounting control/cost systems needed for success.
Prepare a memo to management on how the cost accounting function for the new online business unit would be created and what it would accomplish.
a. Analyze the various perspectives that could be used to measure the performance of the new unit. For example, a financial perspective would be an obvious one, but within that perspective, you may want to consider different viewpoints. How would the CEO of the parent unit define success? How would the General Manager of the new online business unit define success? What other perspectives are appropriate?
Cost accounting is a field of accounting that provides economic and financial information for managers and other internal users. Cost accounting is providing information, which is helpful in monitoring and evaluating management performance
The function of Cost Accounting is to:
? Providing information to people inside the company
? To make internal investment decisions
The reporting is done mainly to the management of the organization. The timing, preparation and the format is decided by the requirements of the management.
Use of cost accounting system:
1. Performance Measurement
2. Performance Evaluation
3. Evaluation of allocation of Decision Rights.
It helps in studying the relations between:
* fixed costs;
* variable costs; and
Break-even analysis is one of the tools of the managerial accounting, a device for determining the point at which sales will just cover total costs.
The break-even point for a product is the point where total revenue received equals total costs (TR=TC). A break-even point is typically calculated in order to determine if it would be worthwhile to sell a proposed product, or to try to figure out whether an existing product can be made profitable. If a firm's costs were all variable, the problem of break-even volume would never arise. By having some variable and some fixed costs, ...
This explains the proposal for a Cost Accounting system for a new online business unit