2. COST ACCOUNTING CONCEPTS FOR IS ORGANIZATIONS › 2.4 Transaction Accounting

2.4 Transaction Accounting

An intermediate sized automobile sells for $10,000, an
appendicitis operation costs $1500, an attorney drafts a will
for $250, and a steak dinner sells for $14.95.  Each of these
products and services has been produced and analyzed by its
management for a long enough period of time to establish
"standard" charges per unit, product, or service.  In fact,
the customers demanded this form of standard unit charging so
that they could effectively understand and plan their
expenditures.

In only a few instances has this charging approach been
successfully used in charging for computer services.
Generalized computerized payroll systems charge their users
according to the number of employees processed or checks
generated.  Computerized reservation systems charge their
users a standard fee per reservation request.  Computerized
mail circulation systems charge per organization or person
mailed.  In each of these cases, we are dealing with
relatively complex computer systems that have been able to
implement a standard charge per unit product or service.

Transaction accounting, as used here, means the concept of
charging for computer services by applying a standard charge
per unit of input or output (transaction) processed, such as
$2.50 per payroll check, $4.75 per reservation request, or
$0.26 per addressed letter.  The standard fee must remain
constant for a long enough period of time, such as one year,
to ensure accounting stability.

The idea of transaction accounting has always been well
received by the users of computer services and by corporate
management because it is such a simple concept to understand.
Additionally, transaction accounting is the charge-out
philosophy in most facets of business outside the computer
services area.

The following sections discuss transaction accounting in more
detail:

    1 - Resource Accounting/Transaction Accounting Examples
    2 - Implementing Transaction Accounting
    3 - Summary of Transaction Accounting