The human element: the real challenge in modernizing cost systems

Article Abstract:

The real challenge in adapting cost accounting to new manufacturing processes is not technical, but human. As the manufacturing environment moves toward integrated automation, the emphasis of cost accounting must shift from the efficiency of individual operations to the capacity utilization of the production process as a whole. Individual direct labor efficiency measures should be replaced with a 'specific identification' cost system in which costs are directly allocated to a process or product whenever practical. Depreciation should be applied on the basis of process output rather than a time factor. Materials costs should be captured in a separate overhead cost pool and assigned to products through a material cost overhead factor, rather than the traditional method of assigning costs to a general plant overhead cost pool and direct labor costs.

Human resource management, Cost control

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OPUS: a new concept for mastering cost

Article Abstract:

The Optimum Performance Using Synthesis (OPUS) concept, pioneered by IBM, can be used by management as a tool for rating and measuring manufacturing quality and performance, which leads to optimum control. OPUS will supplement present measurement systems and provide management with data suited to certain production areas. A model is provided which utilizes the OPUS principle as the foundation of all costs which are related to the efficiency of the manufacturing areas. The OPUS concept helps management gain total understanding of the elements which are crucial to the firm's overall production and competitive success in the global market.

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Uniform capitalization: rules are here to stay

Article Abstract:

Uniform capitalization rules are mandated by the Tax Reform Act of 1986 to account for inventory. All manufacturers and some wholesalers and retailers are affected. Implementing the rules will be expensive and labor-intensive for tax departments. Implementation now will help save taxes and avoid noncompliance penalties later. A common approach is to integrate the new rules into existing cost accounting methods or by using worksheet calculations and aligning the uniform capitalization rules to a summary statement.

Inventory control

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