FINANCIAL ANALYSIS & CONTROL

M.COM-I SEMESTER-II
Topic- UNIFORM COSTING

Submitted by:
Name: Jeethu K Jose
Roll No.:1423
 UNIFORM COSTING:
 Meaning:
Uniform costing is not a distant method of cost accounting,
but it is probably the latest technique of costing and cost control. The
basic idea behind uniform costing is that the different concerns in an
industry should adopt a common method of costing and apply uniformly
the same principles and techniques for better cost comparison and
common good.
 Definition:
ICMA London: “Uniform costing is the use by several
undertakings of the same costing systems, i.e. the same basic costing
methods and superimposed principles and techniques.”
 Advantages of uniform costing:
• High standards:
Either highly qualified experienced professional and consultants or the experienced
members in the industry design uniform costing system. So it ensures high standard of
operation.

• Automation of data:
Uniform costing needs computerization of accounting, data collection, classification
and reporting. So automation of data becomes necessary. It ensures reliability of data and
information.

• Fixation of selling price:

Accumulation of cost data on sound principles helps in determining selling on a
uniform basis to suit the requirements of all the participating firms.
• Healthy competition:
Removal of rivalries and eliminates inculcates a spirit of healthy
competition. Uniform costing helps to create belief among the member units and stops
the price cutting or any other cut throat competitions measures and tactics. It ensures
to adopt policies that give reasonable and fair rate of return on the investment.

• Reduce labour turnover:

Introduction of a uniform costing wage system in all the firms in the
industry helps to reduce labour turnover.

• Customer satisfaction:
Since the prices fixed by uniform costing create customer satisfaction, it
improves the relation between customers and industry.
 Limitations of uniform costing:
• High initial installation cost:
Small firms in an industry think that the uniform costing in system is
meant only for big and medium size firms as its installation involves high initial cost
which they cannot afford. Moreover, smaller firms may not derive sufficient benefits as
compared to the cost of installation and operation of the system.

• Common principles and procedures:

Uniform costing requires lying down of uniform principles and
procedures. Sine the individual circumstances of each concern varies to a great extent,
bringing uniformity in procedure, practices, etc. poses serious problems.