Cost accounting

Maintenance costs account for a large fraction of the total operating expenditure (opex) of a project. Because of the bath tub curve mentioned above, maintenance costs typically increase as the facilities age just when the production and hence revenues enter into decline. The measurement and control of opex often becomes a key issue during the producing lifetime of the field as discussed in Section 14.0. However, the problem should be anticipated when writing the FDP. 

Textiles. A unique combination of desirable quaUties and low cost accounts for the demand for acetate ia textiles. In the United States, acetate and triacetate fibers are used ia tricot-knitting and woven constmctions, with each accounting for approximately half the total volume. This distribution changes slightly according to market trends. The main markets are women s apparel, eg, dresses, blouses, lingerie, robes, housecoats, ribbons, and decorative household appHcations, eg, draperies, bedspreads, and ensembles. Acetate has replaced rayon filament ia liner fabrics for men s suits and has been evaluated for nonwoven fabrics (79—81). 

Between 1979 and 1991, the amounts of herbicide apphed in the United States have remained constant, but the expenditures on herbicides have increased 54%. Agricultural costs accounted for ah. of this increase and more, since herbicide user expenditures in the government/commercial and home sectors combined dropped 3 to 4% during that period. Increased weed control costs related to crop protection have also contributed to the 37% increase, since 1988, in total annual user expenditures for pesticides in general, ie, herbicides, fungicides, and insecticides. In the United States, agricultural uses (ca 1993) account for more than 67% of total pesticide user expenses and 75% of the quantity used annually. Herbicides are now the lea ding type of pesticides in terms of both user expenditures and volumes used (1). 

Finance. Cost accounting, budget control, payroU, records, accounts payable, accounts receivable, capital equipment control, taxes, customs, iasurance, loss control, and management information are all part of the finance function. 

Nonraw-material variable costs consist largely of utiHty costs, but other costs can be significant in this area. Eor example, operating costs for additional waste treatment are in this category. Nonraw-material variable costs account for 5—20% of the total manufacturing cost of an alkylphenol operation. 

Types of Accountancy The traditional work of accountants has been to prepare balance sheets and income statements. Nowadays, accountants are becoming increasingly concerned with foi ward planning. Modern accountancy can roughly be divided into two branches, financial accountancy and management or cost accountancy. 

Cost accounting is the name traditionally given to accounting for manufacturing costs. The manufacturing cost of a product is traditionally taken as the sum of the costs for (1) direct materials, (2) direct labor, (3) manufacturing overheads, and (4) administration, selhng, and finance. 

However, it is sometimes quite difficult to separate costs and particularly manufacturing overhead costs into fixed and variable components. In the long term virtually all costs are variable. The difference between the two methods assumes great importance in inventory evaluation. In cost accounting, costs are identified with cost centers. These are accounting devices which may or may not have a physical existence. In the simplest case of a plant manufacturing a single product, the entire plant may be the cost center. 

In practice there are two major classifications of cost accounting systems, job costing and process costing. In the former, costs are col-lec ted for each job or batch irrespective of the accounting period. This system is normally used in construction work. Process costing is normally used in continuous and semicontinuous processes. Costs are collected for a specific accounting period. 

It is important to reahze that the method used to value inventoiy for cost accounting purposes is not necessarily the one used to draw up the balance sheet and financial accounts. In this case, inventoiy is valued either at the cost given by another method or at the market value, whichever is lower. 

Tne Standard Hour The standard hour can be defined as the number of units of output expected to be produced in I h. It is often used as a measure of output rate by cost accountants. 

It is common practice in cost accountancy to treat the standard semivariable cost C vow. t the normal produc tion rate as part of the standard fixed cost. In this case, Eqs. (9-225) and (9-226) can be written respectively as... 

The application of waste-management practices in the United States has recently moved toward securing a new pollution prevention ethic. The performance of pollution prevention assessments and their subsequent implementation will encourage increased activity into methods that 1 further aid in the reduction of hazardous wastes. One of the most important and propitious consequences of the pollution-prevention movement will be the development of life-cycle design and standardized hfe-cycle cost-accounting procedures. These two consequences are briefly discussed in the two paragraphs that follow. Additional information is provided in a later subsection. 

The purpose of this subsection is to outhne the basic elements of a pollution-prevention cost-accounting system that incorporates both traditional and less tangible economic variables. The intent is not to present a detailed discussion of economic analysis but to help identify the more important elements that must be considered to properly quantify pollution-prevention options. 

As air pollution management moves forward, economics has a major role in reducing pollution. Multimedia considerations are forcing a blend of traditional emission reduction approaches and innovative methods for waste minimization. These efforts are directed toward full cost accounting of the life cycle of products and residuals from the manufacturing, use, and ultimate disposal of materials. 

Environmental Cost Accounting Project cost estimating principles Return on investment calculations Project cost estimating principles... 

This brings us to some very basic principles of cost accounting. These concepts were covered in the first volume of this series Handbook of Water and Wastewater Treatment Technologies), but we will repeat a portion of them here because of their particular relevance to plarming air pollution control projects. The... 

The table shows that energy costs account for 80% of the total cost during the plant s period of operation. The actual costs of the filter, investment, and maintenance correspond to about 20%, while the costs of dumping amount to only 0.5%. The calculation is based on filtering outdoor air, and filters in industrial applications can have quite different figures. 

Electric power systems can be thought of as being comprised of three important sectors generation, transmission, and distribution. For most utilities, generation capital equipment costs account for approximately 50 percent of total plant in costs. Generation also accounts for close to 75 percent of total operation and maintenance expense. 

In dealing with environmental questions, economists emphasize efficiency, social welfare, and the need for cost accountability. A basic principle for efficiency is that all costs be borne by the entity who generates them in production or consumption. For example, production and consumption of diesel fuel will be socially inefficient if significant resulting costs are shifted to others who happen to be downwind or downstream from the refinery that makes the fuel or the truck that burns it. The benefits of making and using the fuel should exceed the cost— society at large—or else the process reduces total social welfare. 

Figure 51.3 provides an example of a typical work breakdown stmcture. The major divisions define specific, logical task groupings as well as the cost-accounting classifications. In the example, cost should be acquired for the preparation of the foundation, installation and final com-misioning of the pump and motor. In addition, each of the sub-tasks that comprise these classifications are logical groups of tasks that must be completed in sequence and by different work classifications. 

Cost Factors) Define a cost-accounting model that includes consumables, labor, write-off, workload, and frequency of recalibration to estimate the cost per result. 

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