Page 400 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 400
Chapter 15
10.2 Problems in using standard costing in modern environments
Standard costing may not be appropriate in the modern production environment
because:
products are non-standard
standard costs become outdated quickly
production is highly automated
ideal standard used in modern environments
emphasis on continuous improvement
detailed information is required
variance analysis provides results ‘too late’.
Test your understanding 14
Are the following statements regarding standard costing true or false?
True False
Standard costing cannot be applied in an organisation that
manufactures specialist furniture to customer’ specifications
because every cost unit is unique
A standard is a benchmark measurement of resource usage
or profit generation set in defined conditions
To reconcile the budgeted contribution to the actual
contribution, deduct adverse cost variances and favourable
sales variances and add on favourable cost variances and
adverse sales variances
392
