What things would you take into consideration while installing a costing system?

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…
What are overheads? How are they classified?
Overheads are the aggregate of Indirect Material cost, Indirect Labour and Indirect Expenses….
Define Factory Overheads, Office and Admin overheads, Selling and Distribution Overheads
Factory Overheads : are the overheads which are incurred from the stage... Office and Admin overheads : are the overheads incurred for the overall administrative work...Selling and Distribution Overheads : are the overheads incurred from the stage of final manufacturing...
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i just love it coz its more understandable
elizabeth 08-14-2015