Management accounting is the branch of accounting that presents financial information to internal executives for making decisions on specific performances. One important function of management accounting is to measure performances of various sections by comparing them with the set standard. Variable-cost system is a part of management accounting that the author considers an important accounting procedure that should be studied. Especially since accounting of present day in Thailand lays emphasis on income tax and legal requirement purposes, not to provide the management with useful datum. This aim of thesis is to study the constraints and advantages of the variable-cost concept, application of rules and accounting procedures to business firms, guidelines for solving problems and cost-data accumulation. Moreover, it seeks to find the means of using account coding procedures to help process financial datum with EDP, the result of which should be a monthly performance report which could be achieved rapidly with high quality processed datum. In order to solve the problems of deciding which cost is variable or fixed, the enterprise under study has divided cost centers into two categories; the first category is production-related cost center, while the other is production-service cost center. Various production costs which are considered varying with the level of activity, that is, with the volume of output, will be recorded and compiled at the production- related cost center, which is used as the basis of calculating variable costs per unit of products. Fixed cost will be accumulated at the production-service cost center. This recordkeeping enables the accountants to produce useful reports, based on the variable-cost system, to the executives with less time and cost involved, especially in the case of standard cost approach. Empirical studies show that the standard cost basis, used in the enterprise under study facilitates accounting procedure and enables performances reports to be produced more rapidly. In addition, it makes it possible to evaluate the productivity of the four factories which produce the same kind and the same quality of output, though with different production processes. Moreover, variable-cost system which is compatible with standard cost approach and flexible budget provides the firm with information necessary for future-profit planning in the short run. In order to comply financial statements and reporting performance to outsiders with generally accepted accounting principles, and avoiding having problems with the Internal Revenue Department, inventory valuation must include an appropriate fraction of fixed cost. So, to provide financial statements for outsiders this inventory value in the internal report must be adjusted from the variable-cost basis to the absorption- cost basis. This could be done without much difficulty. In summary ; variable costing basis provides useful datum for the management. But to achieve this result a good system of data collecting has to be set up which should facilitate the preparation of required reports. The performance report on variable costing basis will then be subjected to some adjustments before presenting to outsiders in order to comply to generally accepted accounting principles as well as legal requirements.
