Cost Accounting Function and Objection costing on various grounds

Many objection against Cost Accounting are generally raised against the introduction of costing on various grounds it has been argued that costing is of recent origin and that industrial sectors prospered in past times and are still prospering without the aid of costing and, consequently, expenditure incurred in installing a costing system would be an needless expenditure. This argument looks out to the truth that modern industrial sectors run under highly competitive conditions and that every manufacturer ought to know the actual cost of production to decide haw far they can reduce the selling price. A large number of professional failures in the past may be credited to the lack of knowledge for manufacturer of actual expense of creation and therefore, selling products below cost. It is also argued that modern methods of costing are inapplicable to many types of industries. It is true that costing simply cannot be applied with edge to trading concerns and concerns of small size. But in many circumstances some method of priced at can regularly be devised to suit the requirement of the organization. It should be plainly understood there is no stereotyped system of costing which is often applied to all types of industrial sectors. The system of priced at should be so created about suit the business but not the business enterprise to suit the system. The adoption of costing system did not produce the desired results in many and, therefore, the system is defective. The inability of your system may be due to several triggers such as apathy or indifference of the management, lack of satisfactory facilities, non-co-operation or opposition from the employees. So it is hasty to find fault with the system.

It also abjection against cost accounting that after a little while, a costing system degenerates into a subject of forms and rulings. This is not the fault of the system. It is the because of the way in which the system is maintained. Forms and rulings are necessary for a charging system nevertheless they must be revised and brought up to date in the light of altered conditions. If this is not done, the machine is bound to degenerate into merely a subject of forms and rulings. The objection against the cost accounting that is the cost involved with setting up and working a cost system is out of all proportions to the benefits derived there from. It may be explained in this connection that a costing system must be a profitable investment and should produce benefits commensurate with the costs incurred on the system. If care is considered to devise a being system to suit the needs of the industry and steer clear of unnecessary elaboration, expenditure received in installing and working the system will be a profitable investment and will bring enough go back.