9–17. Revise Traditional Cost Accounting Reports

Though many of the other best practices advocated in this chapter involve doing away with or replacing the existing set of cost accounting reports, there are instances in which they can be modified sufficiently to still be of great use. This section deals with a number of small changes that can greatly enhance these reports. Though it would be best to install all of these upgrades, even using just one or two of them would bring about an incremental improvement in costing information. The changes are as follows:

  • Assemble products into reporting groups. Too often, a cost report presents a list of hundreds of products, sorted by product number. Though there may be plenty of valid information in such a report, there is no easy way for a busy executive to determine where it is. Instead, it should be grouped into relevant categories, such as clustering all product variations into a single summary number or clustering product sales by customer. These clusters should always contain subtotals so managers can take in the total cost impact of each group at a glance.

  • Give rapid feedback. There is no point in compiling a perfect cost analysis if it is done months after a product is produced. Instead, a good cost report should be issued as soon as possible after a product is completed, allowing management to make changes to improve costs the next time the product is made. The best case of all is when a cost report is issued to management while ...

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