Traditional Cost Accounting Method Business & Marketing Research Paper (Research Paper Sample)

Traditional Cost Accounting Method
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Traditional Cost Accounting Method
The traditional cost accounting method (TCAM), also known as the conventional method, means allocating manufacturing overhead costs to manufacturing of products. In this method, the factory's indirect costs are assigned to the manufactured items on the basis of volume. These may be direct labor hours, quantity of units made or the production machine hours. Accountants, using this system, only allocate manufacturing costs to the manufactured products.
TCAM has an advantage in that it conforms to Generally Accepted Accounting Principles (GAAP). It also makes it easy to implement for companies that produce only one product. TCAM is normally used by companies in external financial reports since it presents a value for the cost of goods sold.