Symptoms of Costing System Obsolescence – a Critical Analysis

Symptoms of speak to System Obsolescence A Critical Analysis 1. creative activity Costing Systems ar critical to management because they have heartbreaking implications for the set and positiveness related decisions made by the management. In a nonmilitant commercialise it may be possible for the air to hurt its products at a point that is acceptable to most(prenominal) 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 grandness in matched commercializes, as the organisation does not have any authoritative pricing power in such markets (Oliver, 2004). In highly 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 bell so as to picture peripheral profits even at the lowest market p rices, hence the organisation is apt(predicate) not to survive in the long-term. This economic fundamental of pricing in competitive markets would lead wholesome alone if the organisation is capable of determining the cost of the products accurately. This in turn depends on the appropriateness of be body 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 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 inac! curate and incapable cost systems could not only hotshot to losses but also threaten the really 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 case 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 They argue that it would be possible to determine whether the costing system is obsolete on the basis of certain...If you want to shoot for a full essay, order it on our website: OrderCustomPaper.com

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