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Uniform Costing

Different types of costing principles and the practices are used by different industries to suit their requirements. However, for comparing the achievements, costs, targets, profitability etc, within the firms, it is essential that same set of principles and practices are adopted by all the firms within an industry. The use by several undertakings of the same costing principles and/or practices is called as uniform costing. It is usually expected in case of a uniform costing system that all firms within an industry include the same items in cost, apply similar methods of distribution of overheads, adopt the same items in cost, apply similar methods of distribution of overheads, adopt the same general classification of accounts, install similar forms and procedures, and present similar statements. The service departments and producing departments are classified on the same pattern in all the firms. The policy regarding the treatment of overhead items is also fixed in general.

Uniform costing is neither a costing method like job or process costing nor it is a costing technique like standard costing or marginal costing but a particular system which may combine any of the costing methods and any one or more techniques of costing.

The question of the application of uniform costing arises only when two or more units want to follow the same costing practices. These units should be engaged in the same activity. They may be owned or managed by one group or different groups. For example, a number of sugar mills owned or managed by one group may adopt a uniform costing system or different companies engaged in sugar industry may, through a common representative association, agree to follow a uniform costing pattern. The working of the system in the former case will be simpler as compared to the latter. This is because in the latter case the units are not under the same management and therefore the arrangement is purely voluntary.