Question

Why is it important for a company to estimate cost? What are the potential outcomes if a company inaccurately calculates the cost of a product?​

Answer 1

Answer)

It is important to estimate cost earlier to make for the amount of finance getting ready required to carry the operations.

Thepotential outcomes if a company inaccurately calculated the cost of a product is:

1)The Actuals may exceed the Budget by great extent which may lead to need of additional funds which may lead to aquiring of funds for greater cost due to timelessness.

2)Fixing of selling price at less magin than intended may happen which can lead to loss or inadequate profits.

3)Wrong presentation in financial statements like showing more profits or losses and providing wrong details in balance sheets.