The Accounting Historians Journal Vol. 17, No. 1 June 1990
Dixon Fagerberg, Jr.
A WORLD WAR II COST ACCOUNTING ASSIGNMENT
Abstract: This article describes the development of a process cost accounting system for a war production plant in 1942. A variety of cost drivers were used for purposes of allocation of overhead. In addition, the role of the cost accountant in the war effort is emphasized.
Although Pearl Harbor and America's declaration of war against the Axis powers was creating tension in the country, my professional life as a CPA in Arizona was relatively normal in the winter of 1941-42. At that time, I heard of a tremendous complex of plants being built nearby for the production of magnesium. The site of the plants was later named Henderson.
Magnesium is the lightest of the metals and has many structural uses when alloyed with zinc, manganese or alumi-num. This plant's output, though, was wanted for its pyrotech-nical qualities in order to manufacture incendiary bombs to be dropped on Germany. The name of the Organization was Basic Magnesium, Incorporated (BMI) and the Defense Plant Corpora-tion was destined to invest some $140 million in the project. Over 7,000 employees were already working feverishly to com-plete the facilities by mid-1942, the date targeted for initial magnesium production.
Everything about the BMI situation intrigued me: its size, its importance, its proximity, and the metal-extractive nature of the underlying production processes. So, with some audacity perhaps, I applied to BMI on January 2, 1942, for the specific task of designing and installing BMI's accounting system. Fol-lowing a drawn-out series of letters and interviews, I was hired and reported for work on May 13, 1942.
Upon reporting for work, I was flabbergasted with the size of it all — not one plant, mind you, but rather 12 or 14 huge, separately structured, facilities in process of construction and machinery installation. As I recall, there were some 300 people