Institutions Implement Cost Accounting Differently, But Ach

Cost accounting is becoming a necessity at most financial institutions since it allows the institution to track the profitability of various business units. The first step in developing a cost accounting system involves conducting interviews and generating an organizational flow chart to determine w...

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Bibliographic Details
Published in:Financial managers' statement 1988-05, Vol.10 (3), p.41
Main Author: Melia, Marilyn Kennedy
Format: Article
Language:English
Subjects:
Accounting
Accounting systems
Cost accounting
Financial institutions
Implementations
Information systems
Systems development
Online Access:Get full text
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Summary:Cost accounting is becoming a necessity at most financial institutions since it allows the institution to track the profitability of various business units. The first step in developing a cost accounting system involves conducting interviews and generating an organizational flow chart to determine whether departments are profit or cost centers. Next, general ledger data are used to compute each unit's profits and losses, including the allocations of overhead and expenses. Reports then are prepared and sent to the department heads. There are several items that can help in implementing a cost accounting system, including: 1. support from top management, 2. unit managers' understanding that cost accounting is not working against them, and 3. understandable reports for the unit managers. Although cost accounting has not been in place at most thrifts and smaller banks long enough to produce dramatic changes, some financial managers are reporting favorable early results.
ISSN:0887-4808