Installing and Designing a Cost Accounting System.

Q11. What are the factors to be considered while installing and designing a cost accounting system?
Ans. Following factors is to be considered:

  1. Objectives of cost system should be pre-determined.
  2. Area of operation should be fixed.
  3.  Organization and management should be signed out.
  4. Technical aspects should be studied.
  5. Nature of variable expenses and changes in it with the changes in the volume of output should be studied.
  6.  Manner and nature of integration between cost and financial accounts.
  7. Type of information available, its nature, source, and other details should be considered.
  8. Method of verification of accuracy of data should be considered.

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