Start using this Workflow
Cost Accounting checklist
Cost Identification and Classification
Review the list of all costs incurred by the business to ensure they are recorded and categorized properly.
Classify costs as direct or indirect, and variable or fixed, to facilitate proper allocation.
Identify and segregate non-operational costs to prevent distortion of product cost calculations.
Cost Allocation and Apportionment
Allocate direct costs to specific cost objects, such as products or projects, based on traceability.
Apportion indirect costs to cost objects using rational and consistent allocation bases.
Reevaluate the allocation bases periodically to ensure they reflect the current usage of resources.
Budgeting and Variance Analysis
Prepare a flexible budget that can adjust for changes in production levels or operating capacity.
Conduct variance analysis to identify differences between actual and budgeted costs, and investigate the causes.
Revise budgets and forecasts based on variance analysis to improve accuracy in future periods.
Cost Control and Reduction
Implement cost control measures to monitor and manage costs effectively.
Identify opportunities for cost reduction through process improvements or renegotiating supplier contracts.
Regularly review cost centers and responsibility accounting to maintain accountability for cost management.
Inventory Management and Valuation
Ensure accurate recording and valuation of inventory using appropriate costing methods such as FIFO, LIFO, or weighted average.
Conduct regular physical inventory counts and reconcile with accounting records.
Review and adjust inventory for obsolescence or impairment losses as necessary.
Performance Measurement and Reporting
Develop and maintain a cost accounting system that provides timely and relevant information for decision-making.
Create regular reports comparing actual performance against standards and budgets.
Utilize activity-based costing (ABC) to gain insights into the true cost drivers and enhance performance measurement.
