Essentials for Inter Firm Comparison
The accomplishment of an inter-firm' comparison scheme relies on the successful operation of uniform costing system. If uniformity cannot be carried about in costing procedures and principles, the comparison would be futile and farce. Though, the following extra points should be remembered when implementing the scheme of inter-firm comparison:
When installing an inter firm comparison scheme, following needs should be considered in detail -
1. Existence of uniform costing
As indicated before acceptance of uniform costing only makes such types of scheme successful, so all needs for a good uniform costing system should mast be fulfil.
2. Scope of data collection
It is nothing but ascertaining the areas of such type of comparison. This relies on needs of the member units, efficiency of the central organization, usefulness and value of the information, etc.
3. Central Organization
For efficient operation of the scheme there is requirement of a central organization. Representations, Collection, analysis of data are the main responsibility of the organization. Though, protection of secrecy of absolute data of individual firm is the top function of the organization. Confidentiality and Secrecy of the codification of the members and their absolute data should be at top priority. Just the analyzed and proceed data should be published to the make use of members.
4. Methodology
Generally the data is to be supplied through the firms by regular interval in the set forms only. The general published data might be taken directly from such type of publication. When interpreting the analyzed data ratio analysis is resorted. The absolute data apart from that of the published data is never ever supplied to the other firms. It raises the confidence and utility of the comparison. The outcomes of the comparison might be given in the form of journals, articles, etc. by regular publications through the central organization.
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