The success of an organisation in cost control and cost reduction depends largely on the installation of an ideal cost accounting system which identifies, classifies and...

The success of an organisation in cost control and cost reduction depends largely on the
installation of an ideal cost accounting system which identifies, classifies and records all costs
accurately and promptly.

Required;

With reference to the above statement, explain four conditions for an effective costing system.

Answers

Conditions for an effective costing system.

- There must be a proper system for stores and stock control

- There must be co-operation and co-ordination among the staff members of the organisation.

- The cost accounts and financial accounts should be maintained in such a way that their results
can be reconciled easily.

- The wages procedure must be proper and satisfactory.

- Overheads must be recorded accurately and must be charged to the respective production
departments.

- The costing department must be established and responsibilities and duties of the cost account
clearly defined.

---

marto answered the question on February 15, 2019 at 07:24

Next: Describe four shortcomings of cost accounting.
Previous: Describe five ways in which cost accounting complements financial accounting in terms of providing information to managers for better decision making.

View More CPA Cost Accounting Questions and Answers | Return to Questions Index

Exams With Marking Schemes

• Grade 1
• Grade 2
• Grade 3
• Grade 4
• Grade 5
• Grade 6
• Grade 7
• Grade 8
• Grade 9
• PP1
• PP2
• Playgroup
• Form 1
• Form 2
• Form 3
• Form 4

Related Questions