The Cost Accounting Problem (UMAP)

This module that applies linear algebra to accounting. Several different techniques (including those used by accountants) solve the cost allocation problem in accounting. These techniques, which are related to several different branches of mathematics, are discussesd and compared. Students are introduced to the cost allocation problem and are shown how the problem can be modeled with several different mathematical models.

Table of Contents:

1. THE COST ACCOUNTING PROBLEM

2. SOME TECHNIQUES USED BY ACCOUNTANTS
2.1 The Direct Redistribution Method
2.2 The Sequential Redistribution Method
2.3 The Successive Simultaneous Redistribution Method
2.4 The Linear Algebra Method
2.5 The Matrix Algebra Version of the Linear Algebra Method

3. TWO MATHEMATICAL INTERPRETATIONS
3.1 The Markov Chain Method
3.2 The Numerical Analysis Method

4. SUMMARY

5. REFERENCES

6. SOLUTIONS TO EXERCISES