Advantages of uniform costing.The use of uniform costing provides the following advantages to different sectors.1. For members units(a) Accumulation of cost data on sound principles helps in determining sellingon a uniform basis to suit the requirements of all the participating firms.(b) Removal of rivalries and enmities inculcates a spirit of healthy competition.(c) Areas of inefficiencies or uneconomies are located out and thus effortsfor improving efficiency can be made.(d) The member-firms realise the importance of controlling costs. This feelingof cost consciousness brings reduction in costs.(e) Those participants who do not have expert knowledge of products cangain it from others. Research and development division of large concernsprovides useful information to small concerns.(f) Cost comparison helps the management in knowing the points of theirweaknesses and thus enables them to exercise better control over theoperations of the business.(g) The concerns can appoint a cost expert or consultant jointly and sharesuch costs on a common basis. Thus, it economises the cost of obtainingexpert’s advice about costs.2. For parent organisationIf the member units are under a common control either through a holding company orthrough a trade association, the member units as well as the parent organisation arebenefitted by uniform costing in the following manner.(a) The association can present the problems of member-firms to theGovernment in a better way when it has with it the data about costs of allthe firms. It helps in obtaining grant or subsidy, import-export licence etc.(b) Sales in the home and foreign market can be promoted by making a jointeffort at the association level.3. For government(a) Costing data can easily be available to the Government through the tradeassociation and the Government can expeditiously decide the policy mattersregarding granting of subsidy, import licence etc.(b) On the basis of cost and profit data the ‘minimum’ and ‘fair’ wages canbe fixed by the Government through Minimum Wages Act or Wage Boards.(c) The Government can regulate prices and check the genuineness of theuniform prices fixed by the association. It can also implement controlsystem, if necessary.4. For workers(a) Workers can be paid at better rates and bonus schemes may be introducedfor common benefit of all.(b) Recreational facilities or fringe or non-monetary benefits can be arrangedin a better way on a common basis.(c) Labour turnover is reduced due to more uniformity in rewarding workersby member-firms. This brings stability in workers, which improves theirearnings as well as the earnings of the concern.Uniform Costing and Inter-firm ComparisionFor consumers

(a) Better quality goods are available to customers at cheaper rates.(b) Reasonable prices are charged from customers. This brings a feeling ofconfidence in customers regarding member-firms.General(a) Auditing of cost accounts is facilitated by maintenance of uniform records.(b) The results of one firm can be compared with that of the other and thus itserves as a pre-requisite for inter-firm comparison.Limitations of uniform costingThe system has several advantages, but it is also not free from certain drawbacks.These can be summarised as under:Uniform costing requires laying down of uniform principles and procedures. Sincethe individual circumstances of each concern varies to a great extent, bringinguniformity in procedures, practices, etc. poses serious problems.The member units particularly when independently managed, may not have thefeeling of mutual trust and confidence. Thus, the system may not operatesuccessfully.The member-concerns usually do not provide total information regarding costsand technical procedures. Thus, the system may not prove to be a success.Flexibility of approach is difficult to be maintained. The common prices fixedmay not meet the requirements of all and sundry.Member-units may fix up monopoly prices and thus exploit the consumers. Thus,in a bid to avoid cut-throat competition, cut-throat prices from the point of viewof consumers may be charged.A comparatively small concern may find the system expensive since the systemto be adopted by all member-units has to be uniform irrespective of their since.Fields for uniformityThere is no system of uniform costing which can be suitable in all circumstances. Thedegree of uniformity regarding various cost accounting aspects will depend upon thepurpose with which uniform costing is introduced. However, uniformity will be requiredgenerally about the following matters :Whether job or process or unit costing is to be employed, uniformity should beachieved in this regard.Whether the standard or marginal absorption costing technique is to be adopted,should be determined in common.Materials issued to production are to be priced according to FIFO LIFO orAverage or any other method, should be standardised.

Payment of wages will be according to time-rate or piece rate and whether anyincentive scheme will be in operation or not. In the event of such a scheme acommon plant should be introduced in all the concerns as far as possible.