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What factors should be taken into consideration before setting up a cost accounting system

What factors should be taken into consideration before setting up a cost accounting system

Answers

Martin
a) Preliminary investigation should be done relating to the technical aspects of the business e.g.
method of production, nature of product etc.

b) Organizational structure should be studied to ascertain the scope of authority and where the
head of cost accounting system will be incorporated

c) Current methods of purchase, storage and issue of materials should be examined for the
purpose of improving them

d) Existing methods of labour remuneration should be examined for purpose of introducing
incentives

e) Forms and accounts records should be designed so as to involve minimal clerical labour and
expenditure

f) The system should be effective in cost control and cost reduction

g) The factory size should be organized in an economical way

h) Installation and operation of the system should be economical, i.e. cost should not outweigh
the benefits

i) The system must have effective internal control system
marto answered the question on March 4, 2019 at 06:11

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