What is the prime purpose of a cost statement, and what rules should be borne in mind in its preparation?
The prime purpose of a cost statement is to inform management, quickly and clearly of events upon which they may have to take action. Rules to be borne in mind in preparing such statements are the following:
(i) It must be clearly headed so as to show at a glance what it is about
(ii) It must be dated and show clearly the period it covers
(iii) Presentation should be clear and kept to minimum, detailed figures being given in appendixes
(iv) Approximations may make the statement clearer, i.e by rounding off to the nearest naira or hundred naira and speed up preparation.
(v) The unit cost is often more informative whenever appropriate
(vi) Show clearly to whom the report is rendered and the name of the person or persons making it. Reports should preferably be signed.
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