Symptoms of Costing System Obsolescence – a Critical Analysis

Symptoms of represent System Obsolescence A Critical Analysis 1. insane asylum Costing Systems ar critical to management because they have sobering implications for the set and positiveness related decisions made by the management. In a nonmilitant commercialise it may be possible for the crease to hurt its products at a point that is acceptable to roughly of the consumers and thereby earn abnormal profits. Even in such(prenominal) cases the be establishment determines the extent of profit that is earned by the business. Costing frames carry more grandeur in free-enterprise(a) markets, as the organisation does not have any authoritative pricing power in such markets (Oliver, 2004). In extremely 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 woo so as to reckon peripheral profits even at the lowest market prices, h ence the organisation is probable not to survive in the long-term. This economic fundamental of pricing in competitive markets would function wholesome single if the organisation is capable of determining the cost of the products accurately. This in turn depends on the appropriateness of be carcass to the market and the external environment in which the organisation exists.

If the cost systems espouse by the organisations are obsolete and are incompetent 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-makin g. Decisions made on the base of inaccurate! and 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 cause 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 They argue that it would be possible to determine whether the costing system is obsolete on the basis of certain...If you want to rag a full essay, order it on our website: OrderCustomPaper.com

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