Practical difficulties in an installation of Costing Syste
The following topic “practical difficulties in an installation of costing system” for CS preparation is quite confusing topic to the student. It is explained below:-
Practical difficulties in an installation of Costing System
The major difficulties in the installation of a Costing System and the suggestions to overcome them are as follows:
- Lack of Support from Top Management
Often, the Costing System is introduced at the behest of the managing director or some other director without taking into confidence other members of the top management team. This results in opposition from various managers as they consider it interference as well as an uncalled check of their activities. They, therefore, resist the additional work involved in the cost accounting system.
This difficulty can be overcome by taking the top management into confidence before installing the system. A sense of cost consciousness need to be instilled in their minds.
2. Resistance from the Staff
The existing financial accounting staff may resist to the system because of a feeling of their being declared redundant under the new system.
This fear can be overcome by explaining the staff that the costing system would not replace but strengthen the existing system. It will open new areas for development which will prove beneficial to them.
3. Non-Cooperation at Other Levels
The foreman and other supervisory staff may resent the additional paperwork and may not cooperate in providing the basic data which is essential for the success of the system.
This needs a re-orientation and education of employees. They have to be told of the advantages that will accrue to them and to the organization as a whole on account of the efficient working of the system.
4. Shortage of Trained Staff
Costing is a specialized job in itself. In the beginning, a qualified staff may not be available. However, this difficulty can be overcome by giving the existing staff requisite training and recruiting additional staff if required.
5. Heavy Costs
Under Costing System, heavy costs are involved unless it has been suitably designed to meet specific requirements. Unnecessary sophistication and formalities should be avoided. The Costing office should serve as a useful service department.
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