Uniform Costing
Uniform Costing and Inter Firm Comparison UNIFORM COSTING
Uniform Costing is not a distinct method of costing. In fact, when several undertakings start using the same costing principles and/or practices they are said to be following uniform costing. The basic idea behind uniform costing is that the different concerns in an industry should adopt a common method of costing and apply uniformly the same principles and techniques for better cost comparison and common good. The principles and methods of compilation, analysis, apportionment and absorption of overheads differ from one concern to the other in the same industry; but if a common or uniform pattern is adopted by all, it helps mutually in cost control and cost reduction. Therefore, it is necessary that a uniform method of costing should be adopted by the member unit of an industry.
Objectives of Uniform Costing: The main objectives of Uniform Costing are as follows:— 1.
Facilitates Comparison: To facilitate the comparison of costs and performances of different units in the same industry; it provides objective basis.
Eliminates Unhealthy Competition: To eliminate unhealthy competition among the different units of an industry.
Improves Efficiency: To improve production capacity level and labour efficiency by comparing the production costs of different units with each other.
Provides Relevant Data: To provide relevant cost information/data to the Government for fixing and regulating prices of the products.
Ensures Standardisation: To bring standardisation and uniformity in the operation of participating units.
Reduces Cost: To reduce production, administration, selling and distribution costs, and to exercise control on fixed costs. Essential requisites for the installation of Uniform Costing System: A successful system of uniform costing has the following requirements:—
1. The firms in the industry should be willing to share/furnish relevant data/information.
2. A spirit of cooperation and
Uniform Costing is not a distinct method of costing. In fact, when several undertakings start using the same costing principles and/or practices they are said to be following uniform costing. The basic idea behind uniform costing is that the different concerns in an industry should adopt a common method of costing and apply uniformly the same principles and techniques for better cost comparison and common good. The principles and methods of compilation, analysis, apportionment and absorption of overheads differ from one concern to the other in the same industry; but if a common or uniform pattern is adopted by all, it helps mutually in cost control and cost reduction. Therefore, it is necessary that a uniform method of costing should be adopted by the member unit of an industry.
Objectives of Uniform Costing: The main objectives of Uniform Costing are as follows:— 1.
Facilitates Comparison: To facilitate the comparison of costs and performances of different units in the same industry; it provides objective basis.
Eliminates Unhealthy Competition: To eliminate unhealthy competition among the different units of an industry.
Improves Efficiency: To improve production capacity level and labour efficiency by comparing the production costs of different units with each other.
Provides Relevant Data: To provide relevant cost information/data to the Government for fixing and regulating prices of the products.
Ensures Standardisation: To bring standardisation and uniformity in the operation of participating units.
Reduces Cost: To reduce production, administration, selling and distribution costs, and to exercise control on fixed costs. Essential requisites for the installation of Uniform Costing System: A successful system of uniform costing has the following requirements:—
1. The firms in the industry should be willing to share/furnish relevant data/information.
2. A spirit of cooperation and