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THE IMPORTANCE OF COST ACCOUNTING SYSTEM IN MANUFACTURING INDUSTRIES

ACCOUNTING PROJECT TOPICS AND MATERIALS

CHAPTER ONE

1.0 INTRODUCTION

Cost accounting is considered as the managerial planning and control activities furnishing management with the necessary accounting tools to plan, control and evaluate operation. The term cost accounting as however published by the institute of cost and management accountant is define as “the application of costing and cost accounting principles, methods and techniques to the science art and practice of cost control and the ascertainment of profit”. It includes the presentation of information derived for the purpose of management decision making. The basic difference between a merchandised business and a manufacture is that merchant purchases merchandise in a ready – to sell condition whereas the manufacturer produce the good it sells. In a merchandising business the cost of goods available for sale is based upon the cost of purchase in a manufacturing business on the other hand the cost of manufacturing the finished goods, as a result of this, there is the needs for every manufacturing business to be cost conscious in the course of manufacturing goods. The cost accounting system depends upon the purpose for which the management requires the information for many Purposes such as control, decision making and determination of price.

1.1 STATEMENT OF GENERAL PROBLEMS

The production of items is not problem but knowing the cost involved during such production is the issue at stake. One just have to recover the investment committed in the production of an item through accounting for such cost and passing it to either the middle men or consumers Iclho pay for the items. This has created room for the existence of a production circle in most of our industries now. To account for the production of an items materials, labour and overhead must have their own share of cost which resulted to be the complete production of the production. To this end, manufacturer find it little bit difficult to adequately account for the production cost they incurred and not being able to recover from the item produced, he refinancing power of the organization concerned is reduced in one way or the other, therefore, the producer has to be conscious of cost incurred in the cost at a certain period of time the financing of the project plan becomes adversely affected or ever not possible.

1.2 OBJECTIVE OF THE STUDY

The aims and objective of this study are to evaluate the cost accounting system, which brings out the real situation and existence of an organization. It is aimed at the determining the level of adequacy of cost accounting in the organization’s production activities. Through evaluating the system, the efficiency or inefficiency of such system will come to light which will create opportunity for discussing the ways by which an organization can account for cost of production adequately. Without excluding certain cost incurred during the production. The study is aimed at providing solution to the problems of process cost accounting in industries which one way or the others do affect performance within the industry. It’s aimed at analysis the relevant of cost accounting system an industry and providing solution weaker system.

1.3 STATEMENT OF HYPOTHESIS 1.

Alternative Hi – effective use of cost accounting as a means of control in manufacturing industries cannot minimize cost – Un11Ho – effective use of cost accountings as a means of control manufacturing industries cost minimize cost – UU! IHO effective use of cost accounting as a mean of control. 2. Alternative – an efficient costing system helps an undertaking to ascertain it’s cost of operation.

1.4 SIGNIFICANCE OF THE STUDY

The significance of the study can be reviewed in different perspective. The study serve am importance toward the writers programme as a part of the Kaduna polytechnic requirement which enable the completion of the national diploma programme.

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