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

Which of the following is an advantage of uniform costing for member firms of an association?

A recognised advantage of uniform costing is that common cost data helps remove unhealthy competition such as undercutting on prices. Firms still keep their own records, profits are not guaranteed to be equal, and suppliers and customers are not dictated.

  1. AIt eliminates the need for each firm to maintain its own cost records
  2. BIt allows member firms to guarantee identical profits
  3. CIt helps in the elimination of unhealthy competition such as price cutting, based on common cost dataCorrect
  4. DIt forces all firms to use the same suppliers and customers

Explanation

Uniform costing gives common cost data, helping members set fair prices and avoid price wars. It does not remove the need for individual records, guarantee equal profits, or dictate suppliers and customers.

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