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systems are quite common in smaller and newer companies that have yet to make a erious investment in using cost systems to plan, control, and evaluate operational processes. These systems use actual osts to account for direct material and direct labor flowing into work-in-process accounts and (unlike actual cost systems) use budgeted costs to account for overhead flowing into work-in-process accounts. address the fact that spending on overhead costs is not a constant (daily) flow throughout the year. systems use budgeted costs for all three cost flows (direct materials, direct labor, and overhead) going into work-in-process accounts, Organizations with systems recognize. the value of using budget cost flows throughout the accounting system while separately tracking spending on actual costs. The reconciliation of budgeted to actual costs in the process of building income statements generates valuable cost variance data for all product costs (cost variances are discussed thoroughly in other lessons in this learning series). systems are quite common in large, advanced organizations that have made significant investments in planning, control, and evaluation systems systems are the simplest cost accounting approach, yet these kinds of cost accounting systems are rarely used. As the name implies, systems are based on using actual cost inputs coming into the work-in-process inventory account. The cost of goods sold that is finally reported on the income statement must be actual costs, so you may wonder why organizations would use anything other than cost flows in the accounting system. The problem with cost systems is the challenge that actual overhead costs don't "flow" very welf