Chapter 5: Job-Order Costing

Job Order Cost Accounting Information Systems

Cost accounting information system is the key to management’s assessment of the company’s efforts to achieve a profit.

Many small businesses are cash poor; they cannot afford a “good” CAIS, but they can’t afford to be without one.

A good (optimal) CAIS is one that provides management with needed information that is

(1) cost/benefit justifiable; (2) presented in a form that management can

work with; and (3) available when it is needed.

ZTC CompanyThe company employs seven people, including the

managers.The company has four departmental functions: (1)

accounting and administrative services; (2) plastic and metal signs; (3) painted signs; and (4) service contract work.

The major stockholders and president of the company believed that profit margins were not what they should be and that the pricing policy was the major cause.

The company had no clear idea of overhead and labor costs.