Case Study on Standard Costing and Variance Analysis:
Standard costing : This is generally best suited to organisations with repetitive activities. It is probably most relevant to manufacturing organisations with repetitive production processes. Standard costing cannot be applied easily to non-repetitive activities because there is no clear basis for observing and recording operations. It is difficult to determine a clear standard.
The most effective control is achieved by identifying standards for quantities of material, labour and services to be used in an operation, rather than an overall total product cost. Variances from standard on all component parts of cost should be reported to identify the cause – and ultimate responsibility – for the variance from standard..
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