What are the disadvantages of the cost accounting, Managerial Accounting

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Disadvantages of the cost accounting:

1. It is unnecessary: it is argued that maintenance of the cost records is not necessary and involves duplication of work. It is based on the premise that a good number of concerns are functioning without any system of costing. This may be true, but in the present world of competition, to conduct a business with almost efficiency, the management needs detailed cost information for the correct decision making. Only a cost accounting system can serve this need of the management and thus help in the efficient conduct of a business.

2. It is expensive: it is pointed out that installation of a costing system is quite expensive which only large concerns can afford. It is also argued that installation of the system will involve additional expenditure which will lead to a diminution of profits. In this respect, it may be said that a costing system should be treated as an investment and the benefits derived from the system must exceed the amount spend on it. it should not prove a burden on the finance of the company. For an economical operation of the system, the maintenance should be of the records should be kept to the minimum taking into account the need and use of the each record.

3. It is inapplicable: another argument sometimes put forward is that modern methods of the costing are not applicable to many types of industry. This plea is hardly tenable, given the complexities of operating any enterprise today. The fault lies in an attempt to introduce a readymade costing system in an industry. A costing system must be specially designed to meet the needs of a business. In fact the applications of the costing are very wide. All types of activities , manufacturing and non manufacturing should have consider the use of the cost accounting.

4. It is a failure: the failure of a costing system in a some a concern is quoted as an argument against its introduction in the other undertakings. This is a very fallacious argument. If a system does not produced the desired results, it is wrong to jump to the conclusion that the system is fault. The reason for its failure should be probed. Often it is discovered that the employee were opposed to the introduction of a costing system because they might have locked with suspicion at the introduction of any method which was not taken ir nor known or to which they were not accustomed.

 


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