What is uniform costing?
Uniform costing is not a distinct method of cost accounting like marginal costing or ABC. It is one of the latest techniques of costing and cost control. It refers to acceptance and adherence of identical costing principles and procedures by all or many units in the same industry by mutual agreement.
What is uniform costing with example?
Uniform costing ensures that everyone is using the same methods to report financials. The most common industries required to use uniform costing are public utilities and industries that involve trade associations or receive federal subsidies (e.g., cotton, transportation, education).
What is uniform costing explain its advantages and disadvantages?
Uniform costing develops better informed and healthy competition within the industry which results in control and reduction of cost. 4. Uniform costing provides the members with all benefits of sound costing system. On the basis of available reliable cost information, product pricing is taken up on sound basis.
What are the objectives of uniform costing?
The objectives of uniform costing are to standardize accounting methods and to assist in determining suitable prices of products of firms which adopt this method. Thus objects of a uniform costing system are: (a) It provides reliable data for making inter-unit comparisons of cost performances.
Which of the following is a application of uniform costing?
Uniform costing can be applied in the following types of undertaking: 1. Manufacturing identical products: Those undertakings which manufactured identical products can use uniform costing system. The nature of the business is the same, therefore, it does not present much of difficulty.
Which industry commonly use uniform cost accounting?
Uniform costing may be applied advantageously in an organisation having a number of branches, each of which may be a separate manufacturing unit or in a number of units in the same industry bound together through a trade association or otherwise, or industries which are similar like printing press, hotels, sugar.
What is period cost?
Period costs are all costs not included in product costs. Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs.
Where is uniform costing in operation?
What’s a prime cost?
A prime cost is the total direct costs of production, including raw materials and labor. Indirect costs, such as utilities, manager salaries, and delivery costs, are not included in prime costs. Businesses need to calculate the prime cost of each product manufactured to ensure they are generating a profit.
What is differential cost?
Differential cost is the difference between the cost of two alternative decisions, or of a change in output levels. The concept is used when there are multiple possible options to pursue, and a choice must be made to select one option and drop the others.
What is EOQ and its formula?
Also referred to as ‘optimum lot size,’ the economic order quantity, or EOQ, is a calculation designed to find the optimal order quantity for businesses to minimize logistics costs, warehousing space, stockouts, and overstock costs. The formula is: EOQ = square root of: [2(setup costs)(demand rate)] / holding costs.
What is provisional sum?
Provisional sum items in a building contract are elements of the project that cannot be precisely costed in advance. The builder will include a “provisional” amount in the contract based on their best estimate, and the final cost will be adjusted once the work is complete.