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

Under an inter-firm comparison scheme run by a trade association, which of the following is essential for the scheme to work effectively?

Strict confidentiality is essential: a central coordinating body collects each firm's data and circulates only ratios and industry averages, not firm identities. This builds trust and participation, whereas disclosing names or using inconsistent policies would undermine the comparison.

  1. ADisclosure of each firm's identity to all other participants
  2. BStrict confidentiality of individual firm data, with only ratios and averages circulatedCorrect
  3. CParticipation restricted to the largest firm only
  4. DUse of each firm's own accounting policies without adjustment

Explanation

Inter-firm comparison depends on firms trusting that their data stays confidential; a central body circulates only aggregated ratios and averages. Revealing identities discourages participation, and unadjusted differing policies defeat comparability.

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