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.