Coding of costs

CIMA defines a code as "a system of symbols designed to be applied to a classified set of items to give a brief accurate reference,facilitating entry,collation and analysis"
A cost cording system is therefore based on the selected cost classifications.It is provides a way of expressing the classification of each cost in a shortended symbolised form.

Composite codes
The CIMA terminology describes the use of composite symbols in codes.
For example-
symble892.113 means
8-labour
9-semi skilled
2-grade 2
THESE CODES ARE SHOWING THIS WAS SEMI SKILLED LABOUR
1-indirect cost
1-east factory
3-finishing department
THIS CODE SHOW US THIS LABOUR EXPEDITURE IS TO BE CHARGED AS INDIRECT LABOUR TO THE FINISHING DEPARTMENT IN THE EAST FACTORY.


The advantages of a coding system

Some of the advantages of a well-designed coding system are as follows

More sutable than a description in computerised system.
A code reduces ambiguity.
A code is usually briefer than description.
The requirments for an efficient coding system

Should be unique & certain.
Should be comprehensive & elastic.
should be as brief as possible.
To minimise errors.
The maintenance of the coding system shoud be centrally controlled.
All codes shoud be of the same length.(wherever possible)

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