CHAPTER VIII 
THE DETERMINATION OF COSTS 
INACCURATE OR INADEQUATE CosTs 
Almost every industrial establishment carries on some 
kind of system of records relating to costs, yet it is 
notoriously true that the most important members of the 
managing staffs of these establishments have, as a rule, 
a very meagre knowledge of the elements which go to 
make up the costs of their product. Frequently they have 
still less knowledge of the detailed items of cost involved. 
Generally they have given but little thought to the ques- 
tion of whether the cost methods which they are following 
are those best adapted to their particular industry. 
Frequently they may be of the opinion that they are 
using the best possible cost system for their business. 
However, this opinion is often the result of self-satis- 
faction and does not at all arise from a thorough 
comparative study of cost-keeping as a whole. Even 
after such a general study many fail to make an adequate 
application of cost-keeping methods to their particular 
industry. 
Probably the chief reason for inaccurate cost systems 
is that the subject of cost accounts has not received 
extensive and exhaustive attention on the part of the 
management. In the average business the tremendous 
advantages to be gained from seientifie cost-accounting 
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