Costing And Reasons For Its Importance

What is Costing?

Costing is basically the ascertainment of cost whether for a specified thing or activity.

To ascertain cost, we need to apply accounting and costing principles, methods and techniques

Costs may be historical/being incurred or estimates.

Importance of  Costing:

In view of the complexity of businesses and increasing changes in industry, trade and commerce, costing is becoming very important :

  • It assist management to make decision for example make or buy, whether to accept a special order and others;
  • It assist management in planning and control;
  • Costing assists management to appreciate scarce resources in the increasingly complex business operations;
  • Understanding costing assist in cost awareness, cost control / management;
  • Is vital to an organization’s survival re: using marginal cost in competitive tendering and others.

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