Though, there are numerous cost accounting methods & practices. But in order to compare various units in the same organization or different units in the industry, a new method of cost accounting is used which is called Uniform Costing.
By using uniform costing, we are able to compare the overheads, expenses, activities & profitability etc.
Actually, it is a combination of one or more cost accounting method used by all the undertakings to make the comparison easy and useful. This helps greatly in decision making process.
If an organization is a large one and includes several business units, then uniform costing can be used to compare these units and find the bottleneck issues/ limiting factors causing the lower profitability in any or all business units.
There are numerous objectives of this costing technique:
1. It prohibits the cut throat competition in the industry as each member undertaking in the group is helping others in the fixation of price. So, the customers get the best product in a very reasonable price.
2. It helps in identifying the loss causing activities. As member undertakings help each other in order to improve the performance, any activities that are not performing well can be restructured, re-engineered or eliminated. Here the value chain activities can be analyzed using the data collected from Uniform Costing.
Cost Control - A significant savings can be achieved by correcting the existing activities not are not yielding 100 % output. By uniform costing, the undertakings can also identify unnecessary procedures or processes causing losses in the manufacturing process.