Explain The Essentials Of A Good Costing System?


3 Answers

abdul rehman Profile
abdul rehman answered
The method of costing adopted, i.e. Job or process costing, should be suitable to the industry and serve the objectives of installing the system. A ready made costing system cannot be suitable for every business. The cost accounting system should be tailor made according to the requirement of a business. If a costing system is to be successful, it may be fully supported by executives of various departments and everyone should participate in it. The cot of installing and operating the system should be justified by the results produced. In order to derive maximum benefits from a costing system, well-defined cost centers and responsibility centers should be built within the organization.    Controllable and non-controllable costs of each responsibility center should be separately shown. There should be cooperation and coordination between cost accounting and financial accounting departments. In order to avoid duplication of accounts, cost and financial accounts may be integrated. Well-trained and educated staff should be employed to operate the system. In order to educate the costing staff written manuals and meetings etc should be arranged on a continuous basis.
Kashif Maqbool Profile
Kashif Maqbool answered
The function of this component is to express the scenery plus forms of developed operating charge plus to contrast plus evaluate the two main process of assign such charge to goods the habitual dimensions support plus the extra current movement bottom charge share process. Every process is converse in stipulations of while it's utilize is suitable for formative industrialized charge of goods. Too measured is the practical, behavioral plus civilizing aspect of this process in creation an alternative among them.

The component coat, the scenery plus apparatus of industrialized operating charge, essentials of assign industrialized operating charge, plus the habitual dimensions support operating charge provision process. The extra current movement bottom provision process. An assessment of the habitual capacity plus action based portion system, attractive scientific, behavioral plus civilizing land of a portion system.

ABM refers to examination plus estimate of actions in arrange to progress job practices in an association. This component explains how to utilize ABM to progress executive presentation and manage costs. In ABM analysis, the cost object is an activity. This estimate of actions is the initial pace in supervision actions plus within estimate minor charge substance such because goods, checks, or clients.
maheen mirza Profile
maheen mirza answered
A good costing system consists of the techniques, forms,and accounting records used to develop timely information about the cost of manufacturing specific products and of performing specific functions.Because cost accounting sysytems are most widely used in the manufacturing companies.but the cost accounting system is applicable to a wide range of business situations.For example,banks,accounting firms,and governmental agencies etc.
These techniques should be able to determine the cost of performing various service functions. For example Cost Accounting system in a manufacturing Company should serve two important managerial objectives in order to meet the characteristics of a good Cost Accounting system.

Firstly, it should be able to determine the per unit cost of each manufactured product. Secondly, it should be able to provide manager with informations that will be useful in planning the future business operations and in controlling the cost. Unit cost can be determined by relating manufacturing costs ---cost of direct material used, direct labor and manufacturing overhead, to the number of units manufactured. Unit costs provide the basis for the inventory valuation and measurement of cost of goods sold. They also provide managers with the information useful in setting selling provision and to decide what products to manufacture and evaluate the efficiency of operations. When a costing system provides timely information about unit costs, managers are able to react quickly, identifying those areas which need correcting actions in order to benefit more and more from the given circumstances.

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