Tarvls : “What do you mean? Why would adding on to the building cause us to change our accounting system? Won’t we just add the value of the project to the property, plant, and equipment account on the balance sheet ?”
Mironda : “ Oh, for sure we’ll do that. But what I meant was that you are expanding the scope of your company as well as the variation in the services you offer. Sometimes, you call me to help budget the cost of a proposed job in order to submit a bid. It’s been pretty simple in the past – Just add up the hours we think it will take, decide which professional will handle it, add something for supplies and travel, apply some general overhead, and call it a day. Now, however, with trainees coming here and using the specialized facilities, we’ll need to have different overhead rates for different types of jobs. We will definitely have to start keeping track of costs using a job- order approach. We may need to use some activity-based costing, as well”