Costing Techniques

No purchasing professional can afford to be unaware of the various cost accounting approaches (Lysons and Farrington, 2006)

Information about Costing Techniques

Costing techniques are 'cost down' tools (Hughes et al., 2011), which can refer to a range of methods. Different costing techniques emerged as alternatives to traditional accounting methods in which indirect costs (e.g. lighting, heating, marketing) were allocated in proportion to an activity's direct costs. This became unsatisfactory because two activities that absorb the same direct costs can use very different amounts of overhead. For example, a mass-produced industrial robot and a customised robot would require the same amount of labour and materials, but the latter would use much more R&D, patent and other intellectual property resources than the former (The Economist, 2009).

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