Program accounting was developed by Boeing and other aerospace companies in the 1960s as an extended version of contract accounting to smooth out costs and revenues over the life of an aircraft program that spans multiple contracts and years. It involves accumulating production costs, program tooling costs, and warranty costs to be charged to revenue from an entire program over its lifetime rather than by individual unit or contract, based on estimates of units to be produced, the production period, and expected selling prices and costs.

1. PROGRAM
ACCOUNTING

2. PROGRAM ACCOUNTING
 Developed by Boeing and other players in
aerospace industry in the 1960s
 Boeing used for its 7-seiries commercial airplane
in 2001
 To smooth out costs and revenues which actually
rolls during later years

3. PROGRAM ACCOUNTING
 An extended version of contract accounting
 Contract period is very large
 Several contracts undertaken simultaneously
 Based on average profitability over the airline
program

4. PROGRAM ACCOUNTING
 Profitability of the manufactured contract
products is realized over multiple contracts
and years
 Production costs (including overhead),
program tooling costs and warranty costs
were accumulated and charged to revenue
instead of individual units or contracts

5. PROGRAM ACCOUNTING
 Mainly 3 estimates done to match the
revenue with cost of sales—
1. Number of units to be produced and sold
in a program (accounting quantity)
2. The period over which these units could
reasonably be produced and
3. Their expected selling prices, production
costs, program tooling and warranty costs
for the whole program