What things would you take into consideration while installing a costing system?
Following things should be taken into consideration while installing a costing system:
- Nature of the Product is a very important deciding factor in installing an effective costing system.
- Nature of the Organisation should be considered before installing costing system.
- Objectives of the Organisation should be met with the installed costing system.
- Manufacturing Process: Before installing the costing system the technicalities of the manufacturing process should be studied carefully.
- Technical Details of the business must be studied before introducing new costing system.
- The system should be informative and simple. The system should be simple and easy to use in order to maintain various cost records.
- Reporting Systems: The costing system should be designed in such a way that reports are generated in a proper way to facilitate the cost control decisions.
-The costing system should be elastic and capable of adapting according to the changing environment.
What problems you may face while installing a costing system?
While installing a Costing System an Organisation may face the following problems:
- Lack of Support from Top Management Resistance and non cooperation from the Staff
- Shortage of trained staff
- Non suitability for the nature of product and nature of business
- The cost involved in installing this system may be too high.
What are the various elements of costs?
Material Cost: This is the cost of material or the commodity used by the organisation for its production purpose….Labour Cost: This is the cost, incurred in the form of remuneration paid…