Assignment On

Cost practice in Bangladesh Submitted to:

Mohammad Tariq Hasan Lecturer, Faculty of Business. ASA University Bangladesh

Submitted by:
SL .NO 1 2 3 4 5 6 Name Md. Tazul Islam Babu Banani Parvin Sarmin Akhter Md. Haniar Hossain KH. Raju Ahmed Abdullah al Mamun ID 082-12-0190 082-12-0187 082-12-0191 082-12-0213 082-12-0215 071-12-552

Date of submission: 27th August, 2009

Acknowledgement

Successful completion of any project requires help from a number of persons. We have also taken help from different people during preparing this report. Now here is a petite effort to show our deep gratitude to those helpful persons. At first we would like to express our sincere gratitude to our honorable course instructor

Mohammad Tariq Hasan for his cordial support and

cooperation helped us a lot to bring endeavor into realization. And also our heartiest thanks to the employee of various organization where we went to collect information through survey. We also like to convey our best regard to all the employees of these two sectors who directly helped us in preparing this report.

Letter of transmittal
Date: 27th August, 2009 To

Mohammad Tariq Hasan Lecturer, Faculty of Business. ASA University Bangladesh Subject: An assignment on cost practice in Bangladesh Sir, We are pleased to submit the assignment on cost practice in Bangladesh (cost accounting) that you have authorized us to prepare a partial requirement of management information system. Throughout the study, we have made with the best of our capacity to accommodate as much information and related issues as possible and tried to follow the instruction as you have suggested. We sincerely believe that it will satisfy your requirements. We sincerely hoped that you will be delighted to read this report. If further is required, we will be glad to provide them any time of your convenience. Yours faithfully

SL .NO 1 2 3 4 5 6

Name Md. Tazul Islam Babu Banani Parvin Sarmin Akhter Md. Haniar Hossain KH. Raju Ahmed Abdullah al Mamun

ID 082-12-0190 082-12-0187 082-12-0191 082-12-0213 082-12-0215 071-12-552

Introduction:
We know that to do any types of work we have to expense benefits. Benefits that we have to sacrifice to get another sacrifice is called cost. Various methods of cost are following in various

organizations in our country for managing their financial transaction as well as handling their works successively.

Objective:
The objective of the report is to make us known with the cost method of Bangladesh so that we can identify the cost method that are using in various organization of Bangladesh And prepare me to face the technical situations in taking decision for cost. & Operating work in an ethical manner.

Methodology:
Although there were no many limitations to tried to use both the primary and secondary sources of collecting information to make the report reasonable with as less abstraction as possible. Secondary Data To furnish the report properly information was mainly taken from internet. Primary Data To preparing that report, a large part of interview has conducted with the employee and manager of Medicine Company and textile & RMG.

Limitation:
When we were trying to make this assignment, we felt some problem and we have some limitation, those limitations are:

lack of Experience lack of knowledge, lack of Information and

lack of time

Literature Review:

This book is based on the premise that accounting has been significant to civilization and fascinating! Accounting history is summarized in eight chapters. An overview places accounting

in perspective. In some ways accounting hasn't changed much since Pacioli wrote the first "textbook" in 1494. On the other hand, accounting has been a leader of the Information Revolution. Many aspects of 21st century accounting will be unrecognizable by today's professional leaders. Understanding the role of financial and managerial needs today and in the future requires an understanding of the past.

Luca Pacioli, Father of Accounting The history of accounting is as old as civilization, among the most important professions in economic and cultural development, and fascinating. Thats right, fascinating! Accountants invented writing, developed money and banking, innovated the double entry bookkeeping system that fueled the Italian Renaissance, were needed by Industrial Revolution inventors and entrepreneurs for survival, helped develop the capital markets necessary for big business so essential for capitalism, turned into a profession that brought credibility for complex business practices that sparked the economic boom of the 20th century, and are central to the information revolution that is now transforming the global economy. Twenty-first century accounting will resemble rocket science and will continue to be among the critical professions of the new century. Accountants have not excelled in public relations, but their story is fascinating. And here it is. There are no household names among the accounting innovators; in fact, virtually no names survive before the Italian Renaissance. It took archaeologists to dig up the early history and scholars from many fields to demonstrate the importance of accounting to so many aspects of economics and culture. This book covers the great events. From merchants and scribes long before writing and money, to todays global information networks. Accounting history is summarized in seven chapters. An overview places accounting in perspective. In some ways accounting hasnt changed since Paciolli wrote the first textbook in 1494. On the other hand, accounting has led the information revolution. Many aspects of 21st century accounting will be unrecognizable by todays professional leaders. Understanding the role of financial needs today and in the future requires an understanding of the past. The role of accounting in the ancient world is coming into clearer focus with new archaeological discoveries and innovative interpretations of the artifacts. It is now evident that writing developed over at least five thousand yearsby accountants. The roles of trade, money, and credit also have long

and complex histories. It is difficult to overestimate the importance of double entry bookkeeping. It was central to the success of the Italian merchants, necessary to birth of the Renaissance. The Industrial Revolution depended on inventors and entrepreneurs, not accountants. It is the survival of their firms that required innovative accounting and, later, the development of a profession. Big business, particularly the railroads, required capital markets that depended on accurate and useful information. This was supplied by the expanding accounting profession. The earliest of the Big Eight started in mid-nineteenth century London. Turn of the century America saw the rise of really big business, governable because of improvement in cost accounting. But the Crash of 1929 and the subsequent Great Depression demonstrated problems with capital markets, business practices, and, yes, considerable deficiencies in accounting practices. Many aspects of current accounting practices started with the flood of business regulations from the Roosevelt administration. The earliest electronic computers were funded to assist the World War II efforts. By 1950 massive efforts were begun to automate accounting practices, a continuing process. A global real-time integrated system is a near reality, suggesting new accounting paradigms replacing double entry and generally accepted accounting principles. Why read this book? What we do today in accounting is based on a 10,000-year history. Understanding this history is necessary to comprehending the linkages of accounting to career potential, financial regulation, tax, accounting systems, and management decision issues. This history also is a powerful tool to predict the accounting of the next generation. OverviewAccounting Toward the 21st Century: Where are we Now? How Did we Get Here? Accounting at any point in time and place can represent the level of civilization then and there. As civilization began around villages and developed into empires, scribes invented record keeping systems and kept running inventories of wealth, trade, and tribute payments. Accountants invented writing using abstract record keeping as temple (and later imperial) wealth and complexity expanded. Double entry bookkeeping played a crucial role of Italian merchants superior trading skills. Would the Renaissance have been possible without double entry? Business history involves long-term processes that incorporated dozens of specific innovations. For example, the Industrial Revolution included many inventions from Watts steam engine to Hargreaves spinning jenny. Equally important were the entrepreneurs who used the inventions successfully, often combining several innovations to create a successful business, and the changes to society associated with a new urban labor class. The concept of time took on a whole new meaning. This was a revolution not because it occurred quickly, but because it changed civilization in fundamental ways. The middle class (thats most of us) is a direct result, as is the associated mind setthe work day, commuting, a standard of living well above subsistence, and so on. Accountings role was primarily one of business survival, which led to economic innovation.

Railroad history is tied directly both to the Industrial Revolution and the development of capital markets to finance large business enterprises. After all, the locomotive was a steam engine turned sideways to drive wheels. The business people organizing the first railroads were big thinkers, planning the use of technology that did not exist. Railway surveying, roadbeds, tracks, rail bridges, tunnels, locomotives, and freight and passenger cars did not exist (except for prototypes). Capital markets were expanded and new contractual arrangements invented to finance railroad construction and operations. The railroads also introduced new accounting problems, like how to deal with a vast infrastructure that wears out or becomes obsolete. The inventors and the entrepreneurs of the Industrial Revolution were not cost accountants. But the entrepreneurs that survived the inevitable depressions were. Continued success (and avoiding bankruptcy) required accounting expertise. Beginning in the 19th century the rise of the accounting profession benefited business and investors, especially big business, banks, and other institutional investors. Accounting expertise added both knowledge and credibility to complex financial transactions. The first mammoth monopoly was Standard Oil, organized as a holding company in 1870. The first billion-dollar corporation was U. S. Steel, formed in 1902. Henry Fords moving assembly line turned the automobile industry into a gigantic industry. Autos are useful to analyze the dominance of American big business in the first half of the 20th century and many of the problems in the second half. These include several accounting topicsboth successes and stubborn problems. British and American cost accountants and engineers developed calculations and reporting techniques that allowed the corporate moguls to control vast business empires from corporate headquarters. Part of the process was to buy out or destroy competitors, part of the business history. It is not clear that these practices were illegal or considered unethical. In any case, accountants were willing participants. The cost accounting (and to a lessor extent, auditing) techniques were essential to the dominance of American industry in the first half of the 20th century. Monopoly practices, price fixing, speculation, and market manipulation are part of the Big Business story. So are the market collapse of 1929 and the Great Depression. This massive market failure led to bigger government and increasing regulation, including the securities markets and accounting. Accounting is highly regulated directly because of government response to perceived market and accounting abuses. The role of government is subject to continuing debate, but there is no doubt about the direction of government in the 20th century. The Reagan Revolution may have slowed down the process, but certainly didnt reverse it. The current world of business and accounting is based on the computer and the Information Revolution, which has been ongoing for nearly 50 years and is exploding into the 21st century. The computer proved to be a perfect fit to business. Computers efficiently crunch the repetitive transactions of accounts receivable and payable, inventories, and payrolls. IBM had the vision

early and Big Blue dominated the history of business mainframes and became a billion dollar blue chip multinational. Technology exploded and new industries (and billionaires) created: personal computers, networks and the Internet, and "killer applications" software such as the electronic spreadsheet. The explosion continues as business and accountants struggle to keep pace with incredible technology progress. Capital markets are complex, global, operate 24 hours a days, and rely on accounting information. The role of accounting expands as technology advances. Soon, virtually any information can be transmitted instantaneously across the globe. Who will be up to the challenge? The visionaries will most likely succeed, those with 20th century blinders likely to drop by the wayside. To understand accounting today and predict tomorrow, one must know the history of accounting. That accounting history parallels the rise and development of civilization. Accounting has been surprisingly inter-connected with technology. The accounting-technology-civilization connection is the focus of this book.

Cost practice:
As traditional absorption costing is designed to provide data for external financial reports; in contrast, activity-based costing is designed to be used for internal decision-making. As a consequence, activity-based costing differs from traditional cost accounting in three ways. In activity-based costing: 1. Non-manufacturing as well as manufacturing costs may be assigned to products, but only on a cause-and-effect basis. 2. Some manufacturing costs may be excluded from product costs.
3. Numerous overhead cost pools are used, each of which is allocated to products and other

cost objectives using its own unique measure of activity.

Bangladesh scenario:

On the basis of our survey we found that three types of cost method are using in most organizations of Bangladesh. Moreover, there have few companies those are using other cost methods. Such as a. ABC costing. b. Absorption costing. c. Traditional costing. d. Fixed costing. e. Variable costing.

Analysis and findings:

From our survey we found that different Types of Company use different types of costing method. Small company follows traditional cost as their costing method, medium company are following absorption costing and large or well established company are using various types of costing software.

Recommendation:
Most companies are following absorption costing but few companies still using traditional costing method. As a result, they have known as back-dated. So we think that these companies should follow update costing method for the betterment of the organization as well as for the profit maximization.

Reference: 1. www.executivecaliber.ws/sys-tmpl/historyofaccounting 2. www.financeprofessor.com/.../accountinghistory-anders.htm 3. Book-Managerial Accounting 4. Textile, pharmaceuticals, RMG organization.