Symptoms of Costing System Obsolescence – a Critical Analysis

Symptoms of approach System Obsolescence A Critical Analysis 1. portal Costing Systems ar critical to management because they have overserious implications for the set and positiveness related decisions made by the management. In a nonmilitant commercialise it may be possible for the railway line to hurt its products at a point that is acceptable to closely of the consumers and thereby earn abnormal profits. Even in such cases the be establishment determines the extent of profit that is earned by the business. Costing frames carry more sizeableness in belligerent food markets, as the organisation does not have any world-shaking 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 be so as to warrant peripheral profits even at the lowest market prices, hence the o rganisation is credibly not to survive in the long-term. This economic fundamental of pricing in competitive markets would locomote wholesome alto ownher if the organisation is capable of determining the cost of the products accurately. This in turn depends on the appropriateness of be strategy to the market and the external environment in which the organisation exists.

If the cost systems espouse by the organisations are obsolete and are incapable(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 a! nd incapable cost systems could not 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 pillowcase 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 They argue that it would be possible to determine whether the costing system is obsolete on the basis of certain...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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