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Describe four shortcomings of cost accounting.

      

Describe four shortcomings of cost accounting.

  

Answers


Martin
Shortcomings of cost accounting

- Leads to duplication of work and may be a burden to the organisation.

- Unsuitable for uniform application as each industry operates under unique circumstances.

- It is not cost effective. Installation and operation of a cost accounting system requires huge
initial capital outlay.

- Stereotyped and mechanical since it involves filling in a large number of forms continuously,
unless modern systems are installed.

- Excessive estimation. Cost computation involves a large number of convention estimations,
arbitrary allocation of joint costs. No costs are exact and may give a misleading picture of the
organisation.

- Unsuitable for all purposes. The computation and presentation of particular costs depend on
the purpose for which the data is required.

- Failure to achieve targets may demoralize staff and erode their confidence.
marto answered the question on February 15, 2019 at 07:22


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