Tutorial | September 2004 (Revised January 2006)

Introduction to Cost Accounting Systems

by David F. Hawkins, V.G. Narayanan, Jacob Cohen and Michele Jurgens


Covers the basics of cost system design, demonstrating in a clear, step-by-step fashion how costs are assigned to cost objects. Key concepts include direct and indirect costs, two-stage allocation, cost pools, and cost drivers. Also provides a brief review of several variations of cost systems, explaining the difference between job and process costing, direct and full cost systems, as well as standard cost systems. Provides exercises throughout the tutorial to test understanding of the material.

Keywords: Cost Accounting; Cost; System;


"Introduction to Cost Accounting Systems." Harvard Business School Tutorial 105-701, September 2004. (Revised January 2006.)