Don Slocum
Lycoming College
Accounting
Box 1 Academic Center
700 College Place
Williamsport, Pa. 17701
Telephone number: 570 321-4381
Fax number: 570 321-4161
Email address: slocum@lycoming.edu

Abstract

The Cost Accounting Excel Assignment I use in my class requires the student to design from scratch a cost system for a six department company using:

• a. single rate and departmental overhead systems
• b. ABC
• c. process costing (used in two departments)
• d. allocation of joint product costs
• e. allocation of service department costs

The student programs each department's accounting system on a separate worksheet in a common workbook. When finished the student has linked together all six departments in an accounting system that produces product cost. The assignment is 'freehand' in the sense that it uses no template. Students must develop and enter all formulas on the worksheet themselves. No numbers may be used except in the data portion of the worksheet. However, extensive comments are made on the worksheets that serve both as check figures and a guide to how the spreadsheet should be organized. I assume the student has little exposure to excel and therefore explain in detail the first assignment but quickly move to cursory explanations thereafter. I also allow the students to work together in pairs. The students work the assignment in conjunction with lecture and homework on appropriate chapters in the textbook. When finished the students have completed a workbook that simulates a fairly complex departmentally organized firm's accounting system. However, the system could not be used for accounting because it's developed to solve textbook assignment problems. For instance, the assignment associated with allocating service department costs does not require t-accounts, only journal entries in addition to calculating the allocations.

Learning

This exercise helps the student to:

1. become familiar with excel;
2. understand the techniques that they are learning so that they can program them in Excel;
3. put the separate accounting applications together in one system so they can see linkages and applications are not simply isolated.

Practice

The exercise helps students in the following ways:

1. Gives the students experience with Excel.
2. Provides the student with a real world context for an accounting system.
3. Helps students to see the considerations affecting the design of an accounting system.
4. Integrates a number of different accounting approaches in one accounting system.

Resources

Computer Overhead Allocation Assignment
Cost Allocation Assignment
Original Workbook