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Advantages of uniform costing. The use of uniform costing provides the following advantages to different sectors. 1.

For members units (a) Accumulation of cost data on sound principles helps in determining selling on a uniform basis to suit the requirements of all the participating firms. (b) Removal of rivalries and enmities inculcates a spirit of healthy competition. (c) Areas of inefficiencies or uneconomies are located out and thus efforts for improving efficiency can be made. (d) The member-firms realise the importance of controlling costs. This feeling of cost consciousness brings reduction in costs. (e) Those participants who do not have expert knowledge of products can gain it from others. Research and development division of large concerns provides useful information to small concerns. (f) Cost comparison helps the management in knowing the points of their weaknesses and thus enables them to exercise better control over the operations of the business. (g) The concerns can appoint a cost expert or consultant jointly and share such costs on a common basis. Thus, it economises the cost of obtaining experts advice about costs. 2. For parent organisation If the member units are under a common control either through a holding company or through a trade association, the member units as well as the parent organisation are benefitted by uniform costing in the following manner. (a) The association can present the problems of member-firms to the Government in a better way when it has with it the data about costs of all the firms. It helps in obtaining grant or subsidy, import-export licence etc. (b) Sales in the home and foreign market can be promoted by making a joint effort at the association level. 3. For government (a) Costing data can easily be available to the Government through the trade association and the Government can expeditiously decide the policy matters regarding granting of subsidy, import licence etc. (b) On the basis of cost and profit data the minimum and fair wages can be fixed by the Government through Minimum Wages Act or Wage Boards. (c) The Government can regulate prices and check the genuineness of the uniform prices fixed by the association. It can also implement control system, if necessary. 4. For workers (a) Workers can be paid at better rates and bonus schemes may be introduced for common benefit of all. (b) Recreational facilities or fringe or non-monetary benefits can be arranged in a better way on a common basis. (c) Labour turnover is reduced due to more uniformity in rewarding workers by member-firms. This brings stability in workers, which improves their earnings as well as the earnings of the concern. Uniform Costing and Inter-firm Comparision For consumers (a) Better quality goods are available to customers at cheaper rates. (b) Reasonable prices are charged from customers. This brings a feeling of confidence in customers regarding member-firms. General (a) Auditing of cost accounts is facilitated by maintenance of uniform records.

(b) The results of one firm can be compared with that of the other and thus it serves as a pre-requisite for inter-firm comparison. Limitations of uniform costing The system has several advantages, but it is also not free from certain drawbacks. These can be summarised as under: Uniform costing requires laying down of uniform principles and procedures. Since the individual circumstances of each concern varies to a great extent, bringing uniformity in procedures, practices, etc. poses serious problems. The member units particularly when independently managed, may not have the feeling of mutual trust and confidence. Thus, the system may not operate successfully. The member-concerns usually do not provide total information regarding costs and technical procedures. Thus, the system may not prove to be a success. Flexibility of approach is difficult to be maintained. The common prices fixed may not meet the requirements of all and sundry. Member-units may fix up monopoly prices and thus exploit the consumers. Thus, in a bid to avoid cut-throat competition, cut-throat prices from the point of view of consumers may be charged. A comparatively small concern may find the system expensive since the system to be adopted by all member-units has to be uniform irrespective of their since. Fields for uniformity There is no system of uniform costing which can be suitable in all circumstances. The degree of uniformity regarding various cost accounting aspects will depend upon the purpose with which uniform costing is introduced. However, uniformity will be required generally about the following matters : Whether job or process or unit costing is to be employed, uniformity should be achieved in this regard. Whether the standard or marginal absorption costing technique is to be adopted, should be determined in common. Materials issued to production are to be priced according to FIFO LIFO or Average or any other method, should be standardised. Payment of wages will be according to time-rate or piece rate and whether any incentive scheme will be in operation or not. In the event of such a scheme a common plant should be introduced in all the concerns as far as possible.

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