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CMA Final · Strategic Cost Management · Uniform Costing and Inter-firm Comparison

Four cement units agree to follow uniform costing and to exchange cost data through a trade association. Which of the following is a recognised precondition for the system to work effectively?

Uniform costing works when members adopt common cost definitions, cost centres and cost-sheet formats, so their figures can be compared like for like. Identical size or selling prices are unnecessary, and differing stock valuation methods would destroy comparability.

  1. AEvery member must have identical production capacity and the same selling price
  2. BMembers must adopt common cost definitions, cost centres and cost-sheet formatsCorrect
  3. CEach member must retain its own method of valuing stocks to protect autonomy
  4. DCost data must be shared only with the tax authorities and not with other members

Explanation

Uniform costing requires common principles, classification of costs, treatment of overheads and standard formats so that figures are comparable. Identical capacity or prices are not required, and separate stock valuation methods would defeat comparability.

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