Cost Accounting for Online Business
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You 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, you will help develop the organizational strategy and manage the accounting control/cost systems needed for success.
One of the things I am required to do in this report is as follows:
Evaluate financial and non-financial performance measures and recommend measures for the new online business unit.
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Solution Summary
This posting discusses the development of a cost accounting system for online business. Issues related to financial and non-financial performance measures are also described in detail.
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The online business should use full cost accounting for its online merchandise unit. The cost accounting will take into consideration the overhead costs, operating costs, past expenditures and future outlays. The full cost accounting system will take into account the investment and amortization of the initial investment that the company has made in hardware, software, training and launching of the online business and allot the cost to different cost centers. In addition, the online system will allocate the overhead costs, namely office overhead, salaries of the operators and maintenance costs to different centers. Then the cost of different deals with advertiser, merchandise inventory costs and payment collection costs will be ...
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