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.