Cost accounting

Cost allotment is a process of finding the costs of any activity a undertaking. Cost allotment is an inseparable portion of the programs of the fabrication companies, large corporations etc. However, the process of cost allotment is standard, its basic factors and rules may change in conformity to the domain in which they ‘re implemented.

1. Sing the instance of the U.S Army Corps of Engineers, it is possible to advert that the chief intent of cost allotment in this domain is to find the undertakings costs in conformity to the authorized undertaking intents. Bing a subdivision of the U.S. Federal Government, the U.S. Corps of Engineers are obliged to settle down the issues with cost allotment. This grounds may be connected to the fact that cost allotment is obligatory for most Federal multipurpose undertakings which have reimbursable intents. Furthermore, cost allotment is an built-in portion of multipurpose planning processes necessitating cost-sharing. It is really of import point whether the costs are allocated as this information is used for the rating of fiscal feasibleness and acceptableness of any program. The Corps carry certain duty for the procedure of cost allotment. In instance there is a demand for undertaking reformulation, it may impact the add-on of the new intents, omission of the intents, or any other alterations impacting general range of the undertaking. All these alterations require Congressional mandate which will later impact cost allotment process. For illustration, within the boundaries of hydropower and pilotage undertakings, Drawdown and Flow Augmentation options may hold important impact on cost allotment attacks and the process itself ( US Army Corps of Engineers 2006 ) .

2. 2009 Adopted and 2010 endorsed budget of the City of Seattle represents its ain strategy of cost allotment. The City of Seattle reading lists a series of costs and associated cost drivers for apportioning costs ( City of Seattle budget 2009 ) . In general, these factors represent the programs developed by the assorted domains of societal activity. Though, such factors can non be agreed upon. This may be explained by the fact that cost accounting factors are largely represented by resource drivers and activity drivers. In respect to the budget of the City of Seattle, cost drivers are excessively legion ; they represent every individual subdivision of any organisation with its ain allotments and cost factors. To my head, such strategy of cost allotment factors was used to find one-year cost allotments as a constitutional component necessary for the acceptance of the metropolis budget. However, all the identified single costs and drivers do non do sense for general cost allotment. There should be used a more unvarying method of apportioning costs. For measuring of all the costs in relation to each separate domain, it would be appropriate to use common costs or the methods leting executing cost allotment process in more general footings.

In the theory of accounting cost allotment is largely referred to fabricating companies or to the assorted explicit and inexplicit contractual understandings. However, in Seattle costs are allocated in the City Government puting. This grounds is explained by the fact that cost allotment methods may be applied for one-year costs allotment. In the given instance, the acceptance of the budget implies different accounting processs together with one-year cost allotment.

3. The U.S. Department of Human Services has established a particular Division of Cost Allocation ( DCA ) which provides dialogue services for indirect cost rate proposals and cost allotment programs ( Program Support Center 2009 ) . DCA has 50 old ages experience in the analysis of cost allotment methods and patterns of the entities having Federal Funds. The analysis carried out by the Division of Cost Allocation helps to recognize that all the indirect costs received from the Federal Government are just and correspond to Federal ordinances. Among the services provided by DCA there is the analysis and dialogue of indirect cost rates for colleges, universities, infirmaries, and non-profit-making organisations. DCA helps to transport out the reappraisal of statewide allotment programs. It besides provides proficient aid on the affairs relevant to be allotment methods impacting grant plans etc. There are some ways by agencies of which DCA administers cost allotment for infirmaries, colleges, and non-profit-making organisations. Annually, DCA conducts the reappraisals of cost allotment programs and the accounting patterns. In instance there are found some overbilled sums, there are developed the ways in order to obtain a refund. In 2006 The Financial Management Service and Division of Cost Allocation obtained understanding from California to return the overbilled sum of $ 20 million in information engineering. Apart from that, Division of Cost Allocation was involved to the analysis of the programs of the freshly created California Department of Public Health ( CDPH ) . DCA provided the analysis of the cost allotment programs and dialogue procedures ( Program Support Center 2009 ) .

4. Cost allotment represents the processs relevant to different types of bureaus and organisations. Cost allotment is connected to governmental bureaus as the U.S. Army Corps of Engineers, U.S. Department of Human Services, fiscal sections of the separate provinces. At the same clip, cost allotment processs are widely applied for the demands of companies and organisations. It is applied to assorted contractual understandings. These may be expressed or inexplicit contracts. Explicit are some voluntary contracts sharing the cost of a resource or the contracts imposed by jurisprudence. Cost allotments are besides of import while accounting income ( Abdel-Khalick 1998 ) . Income accounting is widely used by many organisations and companies in order to cognize the profitableness of their concern, possible losingss and additions. Apart from that, cost allotments are necessary for the rating of feasibleness and acceptableness of all the programs developed by a company. Such large corporations as Hewlett-Packard, IBM apply cost accountings or cost allotments in relation to their fiscal operations, appraisal of the new programs, and many other procedures inseparable from the domain of concern.

Bibliography

  • Abdel-Khalick, R. ( 1998 ) . The Blackwell encyclopedia lexicon of accounting. Wiley-Blackwell. Retrieved September 02, 2009 from:
    hypertext transfer protocol: //books.google.com.ua/books? id=VN8yqZrgqWcC & A ; pg=PA95 & A ; lpg=PA95 & A ; dq=cost+allocation, +definition & A ; source=bl & A ; ots=RwCT9OvVyz & A ; sig=0RaLXOb7z3ARIyn5vJIXxzzX_Qw & A ; hl=ru & A ; ei=-mOeSsKZFZKQmwOF85HIAg & A ; sa=X & A ; oi=book_result & A ; ct=result & A ; resnum=1 # v=onepage & A ; q=cost % 20allocation % 2C % 20definition & A ; f=false
  • 2009 Adopted and 2010 endorsed Budget. City of Seattle, Washington. Retrieved September 02, 2009 from:
    hypertext transfer protocol: //www.seattle.gov/financedepartment/0910adoptedbudget/2009_ADOPTED_2010_ENDORSED_BUDGET.pdf
  • 2009 PSC service and merchandise directory. Program Support Center. Retrieved September 02, 2009 from:
    hypertext transfer protocol: //www.psc.gov/directory/2009directory.pdf
  • U.S. Army Corps of Engineers. Walla Walla District. ( 2006 ) . Retrieved September 02, 2009 from:
    hypertext transfer protocol: //www.nww.usace.army.mil/lsr/reports/misc_reports/allocate.htm