MANAGEMENT ACCOUNTING PROJECT

Departments to determine the average cost and fixing

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departments to determine the average cost and fixing the fair selling prices of various products. 4
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Objectives of Uniform Costing:- To have a reliable cost data for inter-unit or inter-firm comparison of costs. To compare the operational efficiency of individual members against industry’s overall performance of all member units. To fix a common selling price for the industry as a whole on the basis of cost of production of all member units. To reveal lines of individual products which have been marketed on an unprofitable basis. To reveal lines of individual products which have been marketed on an improfitable basis. 5
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Member-companiesadopt one best method of cost accounting system known to the industry. This eliminates unsound method and saves costs required in perfecting systems through expensive experimentation. New companiescan adopt it as a ready-made system. Other companiescan adopt the common system for improving their existing system. It developsa sense of awareness for production efficiencies within the industry for controlling costs. It provides standard guidelinesfor pricing of products and indicates how prices fixed below la certain level may be self-defeating even though it may bring additional sales. It is beneficial to all the competing companiesfor filling tenders and quotations and consequently ill-effects of competition are avoided. In caseof ‘cost-plus’ contracts, uniform costing facilitates preparation of cost sheetson commonly accepted standard principles and practices. Thus, it helps early finalization of ‘cost plus’ claims. It helps the Chambers of Commerce and Industry to present their case to Government on matters such as tariffs or export incentives. It encourages research and development work at comparatively low cost to the member-companies. The benefits of research and development carried out by large scale organized units can be shared by the small 6
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units. It enables the member-companiesto receive the services of cost experts jointly with the minimum expenditure. It facilities the introduction of uniform wage structure for the industry as a whole. It servesas a pre-requisite to cost audit and inter-firm comparison.        7
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The various member-units in an industry differ widely with regard to location, age, condition of plant and degree of mechanization. This difference is sometimes so wide that it doesnot permit efficient use of uniform costing system. For smaller units, this system may not commensurate with the benefits derived. Uniform costing system may not commensurate with the benefits derived. The standard terminology used in the uniform costing system may not be understood properly by the member companies. However, this objective can be overcome by introduction of Uniform Costing.
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