How Do Option Pools Work?
Option pools are synonymous with startups. Founders, investors, and employees expect the company to have some sort of option pool arrangement. It provides startup companies with some much-needed leverage required to compete with established companies in the labor market. However, a large number of entrepreneurs are not clear about what option pools are and how […]
Retail Banking: Time Deposit Products
In the previous article we studied that there are two types of deposits that banks use to fund their lending operations. We studied in detail about the different types of demand deposits. However, demand deposits are considered to be vulnerable sources of finance. Depositors are likely to pull out the funds that form a part […]
Double Entry Bookkeeping System in Accounts
The double entry system of bookkeeping is said to have revolutionized growth in modern business. It is only because businesses are able to keep track of their growing scale of transactions efficiently that they grow further. This has been facilitated by a well designed, error preventing accounting system called the double entry system. Here are […]
Capital Controls: Meaning, Types, Benefits and Downside
What are Capital Controls ? Capital controls are when the governments of nations restrict the inflow and outflow of capital into the economy. In a free market economy, there should be and would be no borders. However, this is not the case in reality. Countries want to ensure that their economies stay relatively stable in […]
Customer Footfall Analysis
The retail sector has started using data and analytics in a big way. In general, data and analytics is used extensively by online players in the retail sector. This means that companies like Amazon and eBay have traditionally been collecting data extensively from their customers and have also been using this data to make business […]
The following is the list of the most probable causes that would cause the job order costing system of the company to fail:
In modern times, we have information technology to the rescue. Companies can now buy off the shelf products for job order costing and use them to simplify the creation of the elaborate system.
The bookkeeping staff needs to be trained about the specifics of job order costing. This training is often expensive and takes time. Only after the process has been somewhat established, does a job order costing system give the benefits that it has been touted to provide.
For instance the allocation base needs to be selected, predetermined overhead rates need to be created and such other tasks need to be done. These tasks require skill and judgment. Only a person that is thorough with the operations of the firm can do these tasks. Thus the firm must ensure that they have relevant expertise before they begin adopting the technique.
The causes of incorrect job order costing can be quite grave. They have been listed below:
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