DESIGN AND IMPLEMENTATION OF A COMPUTERIZED COST ACCOUNTING SYSTEM 

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF STUDY

          The nature and development of an economy establishes the basic requirements for accounting. The emphasis to cost accounting for instance has been directed towards meeting the practical needs of manufacturing industries. The rapid growth and expansion of service industries now demand that accountants direct their attention to solving a new set of problems that are in many industries not related to manufacturing. The accountant is faced with the problem of adapting and combining the present accounting techniques into modern and flexible systems for the service industries.

          The task of accounting for manufacturing costs and expenses obviously requires a further expansion of the preceding system. The form that this expansion takes depends on many factors such as the kinds of control, which is desired to exercise over manufacturing activities, the nature of the manufacturing activities themselves, and the relationship, which is to be mentioned between financial and cost records.

          From the above, it is clear that even though the presentation of cost accounts, for various types of business may vary, i.e is normal to follow the following procedures:

(a)      All expenditure is analysed and classified into direct and costs. The direct costs can be attributed to a particular job process on operation and they are transferred to it.           

(b)      The indirect costs are placed to the relevant account. If they can be placed to one particular account such as factory overhead becomes allocation of overhead. But if they make to be divided between different overhead accounts is called apportionment of overhead.

1.2    STATEMENT OF PROBLEM

In drawing up a scheme of costing, one of the first steps much be decided upon the cost centers, which are to be used. Following this, these overheads, which can be allotted, can be transferred to the relevant sections. The others must be apportioned between the relevant departments. The methods of apportionment will vary but care is needed to select the finest and concernment method in the circumstances.

In this project work, we are narrowing down to the cost accounting system as has been practiced by KRISTAL SILENT, which of course is done manually.

The land of cost accounting in the organization is the historical cost accounting system. Hence the system to be developed will take care of some of those anomalies that pose constraints to the system.

Therefore the research goes on to ask such question as what are the likely benefits to be gained from this project study?

1.3    PURPOSE OF STUDY

          The purpose of this study is trying to figure out the difficulties and irregularities encountered by KRISTAL SILENT in its existing system. The research amongst other things introduces standard that show the cost of production of every unit, job, and process operation or department by close analysis of expenditure. To indicate to management any inefficiencies and waste which are thereby revealed. To serve as a guide to price fixing. To provide comparative statement of costs in which the cost of the current period are compared with the costs of a previous period; or more helpfully, with the budgeted costs; and financially to take action in respect of significant variations of the costs from the budgeted figures and thus to control cost.

1.4    AIMS AND OBJECTIVES     

          The aims and objectives of this project is to redesign and computerized the manual system of cost accounting as being practiced in KRISTAL SILENT. The computerized system amongst other things.

§     Ease the burden of calculating and recalculating of figures to get at the exact output.

§     Automatic report generation and report of the financial status of the firm.

§     Automatic posting of accounts from the individual ledgers to the general ledger

§     Speed of operation will be increased tremendously and volume of output enhanced too.

1.5    SCOPE  

          This project has been narrowed down to the financial humations of particular project undertaken by the said company. It tells us about the nature of project. Its contract value, the equipment and materials procedures in the execution of the project the labour cost and wages to the project. And finally, it furnishes the management with the information of how much was expended while carrying out the project and how much is remaining, that will serve as profit.    

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