Q11. What are the factors to be considered while installing and designing a cost accounting system?
Ans. Following factors is to be considered:
- Objectives of cost system should be pre-determined.
- Area of operation should be fixed.
- Organization and management should be signed out.
- Technical aspects should be studied.
- Nature of variable expenses and changes in it with the changes in the volume of output should be studied.
- Manner and nature of integration between cost and financial accounts.
- Type of information available, its nature, source, and other details should be considered.
- Method of verification of accuracy of data should be considered.