Will You Explain Me The Installation Of A Costing System?


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abdul rehman answered
There cannot be a ready-made costing system for every undertaking. In order to meet the special needs of a business a costing system has to be specially devised to give it a blend of efficiency and economy. The installation of a costing system requires a thorough study and understanding of all the aspects involved as otherwise the system may be a misfit and enterprise will not be able to derive full advantage from it. To start with, it is important to make cost benefit analysis i.e. Weigh the cost of the system against the likely benefits to be derived from it. The benefits from the system must exceed the amount spent on it.      The management must feel the need for it and should be able to make full use of the information available from the system in the conduct of business. In other words, the system should be justified on the basis of its value to management. In installation of following steps are taken like preliminary investigation should be made relating to the technical aspects of the business. For instance, the nature of product and methods of production will determine the type of costing system to be applied.

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