How to do Cost Ascertain? Discussion
Cost Ascertain: Cost ascertained is concerned with the computation of actual costs incurred. It refers to the methods and process employed in ascertaining costs. In different types of industries, different methods are employed for ascertaining the cost.
These methods are, job costing, contract costing, batch costing, process costing, operating costing, single costing, and multiple costing.
The basic principles underlying these methods are the same but these methods have been designed to suit the needs of individual business conditions.
The ascertainment of actual cost has very little utility because of the following reasons:
In spite of these limitations, ascertainment of actual cost proves very useful in many cases. For instance, ascertainment of actual costs reveals unprofitable activities and losses and inefficiencies occurring in the form of idle time, excessive scrap, etc.
These methods are, job costing, contract costing, batch costing, process costing, operating costing, single costing, and multiple costing.
The basic principles underlying these methods are the same but these methods have been designed to suit the needs of individual business conditions.
The ascertainment of actual cost has very little utility because of the following reasons:
- Actual costs cannot be used for price quotations and filing tenders.
- The actual cost has practically no utility for control purposes, and.
- Actual costs are ineffective as a means of measuring performance efficiency.
In spite of these limitations, ascertainment of actual cost proves very useful in many cases. For instance, ascertainment of actual costs reveals unprofitable activities and losses and inefficiencies occurring in the form of idle time, excessive scrap, etc.
No comments: