Calculating the cost of product precisely and presenting reliable information
and reports for economic decision making are the objectives of cost
accounting systems. But, the independent auditors reports reveal that most of
the manufacturing companies, especially state companies, do not possess
suitable methods for cost accounting of products. To identify the
insuficiencies of cost accounting systems of these companies, two
companies, involved in steel industry were selected and operation process as
well as working methods of their different part were examined. The results
show that the cost accounting system of the selected companies, compared to
a suitable accounting system is very in appropriate. The reasons of its
inappropriateness are absence of proper procedures for production
cercufation, absence of accounts related to production process, absence of
correct information a bout the capacity of production lines, inability to
recognize costs behavior, not using proper bases for over head allocations,
not using budget mechanism related to list of the bills, not colwlating and
registering variances and not preparing reliable managerial reports at certain
periods of time