Why Do Some Companies Need a Cost Accounting System While

question 43

Essay

Why do some companies need a cost accounting system while others do not? What are the determining characteristics or factors that influence the type of cost accounting system that is appropriate for a company?

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Definitions:

Weighted-Average Method

An inventory valuation method averaging the cost of goods available for sale and assigning an average cost to each unit.

Assembly Department

A segment within a manufacturing facility where parts are assembled into final products.

Units Transferred

The quantity of goods moved from one production process or department to another in the manufacturing process.

First-In, First-Out Method

An inventory valuation method where goods purchased or manufactured first are sold or used first.