Final answer:
Refining a costing system involves improving accuracy, efficiency, and cost control within a business.
Step-by-step explanation:
Refining a costing system involves improving and enhancing the methods used to calculate costs within a business. There are three principal reasons for refining a costing system:
- Accuracy: By refining the costing system, a business can ensure that the costs calculated are more accurate and reliable. This allows for better decision-making, as the business can have a clearer understanding of the true costs involved in production or other activities.
- Efficiency: A refined costing system can help streamline processes and reduce unnecessary costs. By identifying inefficiencies and areas of waste, a business can make improvements and increase its overall efficiency.
- Cost control: Refining a costing system allows a business to have better control over its costs. It enables the business to identify cost variations and take appropriate actions to manage and control them, ultimately leading to improved profitability.