PRACTICE NOTE Maturity of Cost Management Systems in Organisation

January 16, 2017 JAMAR, Members Area

By Rajendra Patil and Anil Kshatriya

Cost accounting is generally viewed as a manufacturing industry specific function. The service industry gives lesser emphasis on the adoption of mature cost management systems. Business managers across industries tend to assume that since the price is decided by the market, there is little need for investing time and resources in creating and maintaining elaborate costing systems.

Irrespective of whether there is a statutory requirement for statutory reporting of costs (as in the case of India, Pakistan and Bangladesh), very few organisations undertake the study of maturity of their prevailing cost management systems.

This study shows that Activity Based Costing (ABC) and Activity Based Management (ABM) are of greater significance for organisations who aspire to remain relevant and profitable in today’s hyper competitive business environment.

JAMARv14.2- Practice Note-Cost Management Systems

 

About Prof Janek Ratnatunga 1129 Articles
Professor Janek Ratnatunga is CEO of the Institute of Certified Management Accountants. He has held appointments at the University of Melbourne, Monash University and the Australian National University in Australia; and the Universities of Washington, Richmond and Rhode Island in the USA. Prior to his academic career he worked with KPMG.

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