Symptoms of Costing System Obsolescence – a Critical Analysis

Symptoms of salute System Obsolescence A Critical Analysis 1. understructure Costing Systems ar critical to management because they have solid implications for the set and positiveness related decisions made by the management. In a nonmilitant commercialise it may be possible for the subscriber line to hurt its products at a point that is acceptable to nigh of the consumers and thereby earn abnormal profits. Even in much(prenominal) cases the be establishment determines the extent of profit that is earned by the business. Costing frames carry more richness in combative markets, as the organisation does not have any crucial pricing power in such markets (Oliver, 2004). In passing competitive markets, the prices are determined by the market at the low possible sustenance points for the players. If an organisation fails to manufacture products at the lowest possible represent so as to find peripheral profits even at the lowest market prices, hence the or ganisation is credibly not to survive in the long-term. This economic fundamental of pricing in competitive markets would snuff it wholesome that if the organisation is capable of determining the cost of the products accurately. This in turn depends on the appropriateness of be transcription to the market and the external environment in which the organisation exists.

If the cost systems espouse by the organisations are obsolete and are unequal to(p) of identifying the costs and accurately mapping them to the products or units, then it is likely that the system would become less helpful for decision-making. Decisions made on the base of inaccurate and incapable cost systems could n ot only hotshot to losses but also threaten! the in truth survival of the firms in the long run. Chan and Lee (2003) recognise the importance of costing systems and argue that the costing systems should be developed to movement the ineluctably of the environment. They argue that it would be possible to determine whether the costing system is obsolete on the basis of certain...If you want to calculate a full essay, order it on our website: OrderEssay.net

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