Page 397 - F2 - MA Integrated Workbook STUDENT 2018-19

Standard costing

Reporting of variances

The causes of variances can be classified under four headings:

 Planning errors lead to the setting of inappropriate standards or budgets.

 Measurement errors include errors caused by inaccurate completion of
timesheets or job cards and inaccurate measurement of quantities issued from
stores.

 Random factors are by definition uncontrollable, although they need careful
monitoring to ensure that they are not, in fact, one of the other types of
variance.

 Operational factors occur during the production of the product or the provision
of the service. Factors could include less efficient staff being employed and
material spillages.

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