Objectives of Uniform Costing

The techniques of uniform costing may be introduced with one or more of the following objectives:

1. To avoid competition: It eliminates cut-throat competition by fixing common prices on the basis of uniform costing procedures. It thus also aims at bringing stability in prices of the products.

2. Cost comparison: It enables different firms to compare the costs because the costs are based on same principles. Thus, their profitability can also be compared.

3. Measurement of efficiency: Comparison of costs and profitability helps in measurement of efficiency. Uniform costing enables the member participants to use this system as yardstick of their achievements and performances.

4. Reliable prices: The confidence is reposed in the public where the prices fixed are based on sound and uniform costing principles. This will result in better and cordial relations between members adopting this system and their customers.

5. Cost control: One of the objectives of uniform costing is an effective control over costs. This facilitates location of unprofitable ventures. Uneconomies and inefficiencies are revealed at every stage. The uniform cost serves as the standard cost and helps in controlling the off-standard performances.

6. Better exchange of information: Members having technical knowledge provide the benefit of their experience to others. Free exchange of information leads to reduction in costs and improvement in the quality of the product.

Essential pre-requisites for installation of uniform costing system

Following are the pre-requisites for installation of uniform costing system:

1. Willingness: All the firms in the industry should be ready to share among themselves their achievements also frequently.

2. Co-operation and understanding: There should be mutual co-operation and understanding among the members who participate in the uniform costing scheme, otherwise the date for computation of cost and fixation of the selling price of the product under uniform costing will not be available.

3. Confidence and trust: There should be mutual trust and confidence. This is necessary for exchange of ideas and information among members.

4. Absence of rivalry or jealousy: There should not be any inner rivalries. Complete harmony in ideas should be maintained.

5. Common terminology: A common terminology should be prepared by the participating units. This means that they should agree for a common set of principles and/or procedures.

6. Free exchange of information: The information about utilization of “3 Ms” – men, machines and materials should unhesitatingly and freely pass between members so that comparison can be made.

7. Leadership: Bigger firms should take lead towards sharing experiences with smaller firms.

8. Common interest: All the member-firms should have a common interest. It may be selling of goods at uniform prices or making inter-firm comparisons or controlling costs etc.

9. Flexibility: The members should not have rigidity in their attitudes. Flexibility of approach is essential so that changes may be introduced whenever required.

Services: - Objectives of Uniform Costing Homework | Objectives of Uniform Costing Homework Help | Objectives of Uniform Costing Homework Help Services | Live Objectives of Uniform Costing Homework Help | Objectives of Uniform Costing Homework Tutors | Online Objectives of Uniform Costing Homework Help | Objectives of Uniform Costing Tutors | Online Objectives of Uniform Costing Tutors | Objectives of Uniform Costing Homework Services | Objectives of Uniform Costing