What are the essentials of an effective costing system?
Answers
Answer:
(i) Cost Accounting System should be tailor-made, practical, simple and capable of meeting the requirements of a business concern.
(ii) The data to be used by the Cost Accounting System should be accurate; otherwise it may distort the output of the system.
iii) Necessary cooperation and participation of executives from various departments of the
concern
(iv) The Cost of installing and operating the system should justify the results.
(v) The system of costing should not sacrifice the utility by introducing meticulous and unnecessary details
(vi) A carefully phased programme should be prepared by using network analysis for the introduction of the system.
(vii) Management should have a faith in the Costing System and should also provide a helping hand for its development and success.