Environmental Management Accounting Procedures and Principles

More documents

Recommendations

Info

Environmental Management Accounting Procedures and Principles administrative costs, insurance, advertising costs. There are a number of methods to attribute overhead to cost centres and cost carriers. • Calculated Costs are used in cost accounting because they are not – or in a different form - considered in bookkeeping, but influence operating results. If these costs are not matched by expenditure in financial accounting, they are called extraordinary rates, e.g., calculated equity capital interest, calculated rent/lease, calculated management wages. If these costs are matched by an expenditure in bookkeeping, they are also called other costs such as calculated borrowed capital interest, calculated write-offs on the basis of replacement prices, calculated risks. • Costs Centres are those parts of the company that are organized as independent clearinghouses; they should be connected to production processes. Maximum consistency between cost centres and process-oriented material flow analyses is the prerequisite for good data. Cost centres generate costs, are responsible for costs or are attributed costs, e.g., for production and administration. • Cost Carriers or Objects are products and services produced either for the market or for internal needs. By attributing types of costs to cost centres and cost carriers, production costs and sales price floors are calculated. Since financial accounting operates on strict rules for the assessment of expenditures and revenues, calculatory assessments are not permitted. Costs and earnings are thus determined by the so-called roll-over. For this roll-over, financial accounting expenditures are excluded that, from a cost accounting standpoint, are not considered costs because they are: ⇒ ⇒ ⇒ ⇒ Non-operational (e.g., are not connected to the operating objective); Extraordinary (e.g., are exceptionally high or rare); Unrelated to the accounting period; Assessed differently (e.g., they do not correspond to indicated values of the cost accounting calculation objective). These expenditures are called neutral expenditures. Expenditures that are operational, ordinary, related to the accounting period and assessed correctly are at the same time considered costs and are called cost-identical expenditures, functional or basic costs. From this standpoint, expenditures and costs overlap. In a next step, cost-identical expenditures are complemented by calculated costs. Cost category accounting is the first phase of cost accounting and answers the question: • Which costs have been incurred in which amounts during the accounting period? In cost-category accounting, costs are recorded in accordance with a cost category plan and divided into direct costs and overhead. Before this is done, a separation is made from expenditure accounting of financial accounting and/or the roll-over of costs from financial accounting. In the past, an overhead roll-over sheet was used for that purpose; today, computer programs are used. -68-
Environmental Management Accounting Procedures and Principles Cost centre accounting follows cost-category accounting and answers the question: • Where and in what amounts have which costs been incurred during the accounting period? For this accounting procedure, the overhead allocation sheet is used. Cost centre accounting is also responsible for internal cost assignments. Finally, it determines cost estimate rates or billing rates (or surcharge rates) should they be required for cost carrier accounting based on the company operational situation. Cost carrier accounting is the final phase of cost accounting and determines the production costs for each product (or service). It provides the basis for price calculation. It answers the question: • Which types of costs have been incurred in which amounts for a certain product or service? Cost Category Accounting • Which costs have been incurred in what amounts? • Cost distribution to direct costs and overhead • Cost roll-over from financial accounting e.g. Production wages Auxiliary wages Salaries Social Security Production material Auxiliary, operating materials Energy Insurance Rent Calculated write-off Calculated interest Calculated risk Other costs Cost Centre Accounting • Where and in what amounts have which costs been incurred during the accounting period? • Internal cost attribution and cost estimates or billing rates e.g. 1. Manufacturing 2. Warehousing 3. Distribution 4. Administration Cost Carrier Accounting (Product) • Which types of costs have been incurred in what amounts for a certain product or service? Product A Product B Product C Figure 27. Relationship between cost category, cost centre and cost carrier accounting Source: Dimitroff/Jasch/Schnitzer, 1997. -69-
Page 1 and 2:
E C O N O M I C & Environmental Man
Page 3 and 4:
Environmental Management Accounting
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28: Environmental Management Accounting
Page 77: Environmental Management Accounting
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153:
show all

Environmental Management Accounting Procedures and Principles

Create successful ePaper yourself

Delete template?

Save as template?