Standard costing system, Managerial Accounting

Assignment Help:

Standard costing system

However, it has been argued that traditional variance analysis is unhelpful and potentially misleading in the modern organization, and can make managers focus their attention on the wrong issues, for example over-producing and stockpiling finished goods, since higher production volumes mean that overheads are spread over more units. Standard costing concentrates on amount and ignores other factors contributing to efficiency. In a total quality environment, for instance, quantity is not an issue, however; quality is. Effectiveness is such an environment therefore centers on high quality output (produced as a result of high quality input and the elimination of non-value adding activities) and the cost of failing to attain the needed level of effectiveness is measured not in variances, though in terms of internal and external failure costs, neither of which would be recognized by a traditional standard costing analysis.

Standard costing system might measure, say, labor efficiency in terms of individual tasks and level of output. In a total quality environment, labor is more likely to be viewed as a number of multi-task teams who are responsible for the completion of a part of the production process. The efficiency of such a team is more properly measured in terms of re-working needed, returns from customers, defects recognized in subsequent stages of production and so forth.


Related Discussions:- Standard costing system

Cost classifications, How do the different cost classifications can assist ...

How do the different cost classifications can assist the management

Learning and spillovers , Learning and Spillovers The cost of a value ...

Learning and Spillovers The cost of a value activity can decline over time due to learning that increases its efficiency. The methods by which learning can lower cost over tim

Cost classification, identify and explain cost classification for performan...

identify and explain cost classification for performance evaluation

Five stakeholder groups, Private sector companies have multiple stakeholder...

Private sector companies have multiple stakeholders who are likely to have divergent interests.( five stakeholder groups and  discuss their financial and other objectives).

What is activity based management, ABM(Activity based management): ABM ...

ABM(Activity based management): ABM system is primary source of information for AM as a part of ABM identify value added and non-value added activity and management are also to

Interpreting the simplex tableau- sensitivity analysis, INTERPRETING THE SI...

INTERPRETING THE SIMPLEX TABLEAU We can now see that our attention must be directed to reading, interpreting and analyzing the (simplex) results. It is erroneous, however, to a

Inventory planning and control, INVENTORY PLANNING AND CONTROL The main...

INVENTORY PLANNING AND CONTROL The main goal of "inventory control" is to discover and maintain the optimum level of investment in all types of inventories, from raw materials

What are the limitation of break even charts, Limitation of break even char...

Limitation of break even charts Despite many advantages a break even chart suffers from the following limitations: 1) A break even chart is based upon a number of assumption

Constructing the model, Constructing the Model Steps: 1) Identif...

Constructing the Model Steps: 1) Identify the objectives of the simulation (A detailed listing of the results expected will help to clarify the output variables. 2) R

Net operating increase problem , The president expects sales to increase by...

The president expects sales to increase by 12% next year. By how much should net operating income increase? Sales $2,000,000 Variable expenses 1,000

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd