Use Standards Asc Essay

3958 words - 16 pages



Standard Costing became increasingly widespread at the beginning of the 20th century as a system for determining the manufacturing unit cost of a product, by setting standard rates and required material quantities for various production processes (Hyer & Wemmerl�v, 2002). Drury (2008) state that "Product standard costs are derived by listing and adding the standard cost of operations required to produce a particular product." The popularity of this technique increased significantly in the manufacturing industry, mainly because it could be used as a mechanism for managing cost, which could then be used to set product prices.

Over the years, standard costing systems have become more than just cost control tools by helping managers in other decision-making areas, such as performance evaluation and profit measurement. However, towards the end of the 20th century, standard costing has been increasingly criticised as an inadequate management technique. Authors such as, Kaplan and Johnson (1987), Ferrara (1995) and Monden and Lee (1993) have argued that standard costing is inconsistent in today's extremely competitive and global business environment. They maintain that standard costing can produce certain types behaviour that could threaten the survival of modern businesses. Despite, the growing concerns regarding the application of standard costing in a rapidly changing economic environment, standard costing has remained a relatively common tool among business managers and is still regularly taught to students on various accounting and management courses.

This paper aims to critically analyse the use of standard costing as a control technique in a new era. Firstly, standard costing will be examined so as to understand its application in the business world. Secondly, arguments from various researchers will be presented, which support and criticized the use the standard costing. Finally, these arguments will be weighed, so as to draw conclusions as to whether standard costing is still relevant in this new international economic climate.

What is Standard Costing and how is it used?

CIMA (2008) defines standard costing as a "control technique that reports variances by comparing actual costs to pre-set standards, so facilitating action through management by exception. The principle of `management by exception' which applies to standard costing, allows managers to focus on issues relating to costs that deviate from the pre-set standards. Wood & Sangster (2005) note that actual costs that conform to the pre-set standard require little attention, instead management should focus on those actual costs that produce variances and fall significantly outside the standards.

Horngren et al (2002) show that finding the standard cost of a product or service basically requires two groups of calculations. According to Horngren et al, standard costing "traces (a) direct costs to...

Find Another Essay On use standards asc

The Nature of Advertising Essay

2204 words - 9 pages ensuring that advertising is truthful and not misleading and in 1963 advertising industries implemented the Advertising Standards of Canada (ASC). In extenuating circumstances, their job is foster the ethical practices of faulty advertising (ASC, 2012). In doing so, ASC executed fourteen codes of conduct varying from: accuracy, guarantees, imitation, price claims, and safety to name a few which allows the audience to make a more valued choice in

EO Cauliflower ad case study

2101 words - 8 pages has been screened by the ASC. Even the ASC has seen and approved the ad. All Executive Optical ads, including the 'Cauliflower' ad are pre-tested before they are implemented in the media." Ms. de Asis added; noting that the ad is simply about poor eyesight and not about color.Findings and Analysis of Case: Strengths and Weaknesses/Key Issues/GoalsThe EO ad is effective to the people in a sense that it catches the attention and it really gives the

EO Cauliflower case study

2101 words - 8 pages has been screened by the ASC. Even the ASC has seen and approved the ad. All Executive Optical ads, including the 'Cauliflower' ad are pre-tested before they are implemented in the media." Ms. de Asis added; noting that the ad is simply about poor eyesight and not about color.Findings and Analysis of Case: Strengths and Weaknesses/Key Issues/GoalsThe EO ad is effective to the people in a sense that it catches the attention and it really gives the

Autism And EMF

763 words - 4 pages Who would have thought things we use the most without thinking like cell phones and Wi-Fi could be harming you and your child? When my son was 4 the school department approached me with concerns about my son not meeting his benchmark development levels. From that point forward he started receiving help in all aspects of his life. Several times teachers asked me if he had Attention Deficit Hyperactivity Disorder (ADHD). For the next 4 years he

EDI as a Supply Chain Technology

2295 words - 9 pages Group;Term used within ANSI ASC X.12 and EDIFACT standards to identify one or more messages of the same type headed by a functional group header and ending with a functional group trailer.Gateway;Software doorway between two networks which allows messages on one to be routed to the other. A communications standard is used to ensure that the two networks use compatible connections.Guideline;Recommended set of procedures for use within EDI.Header

foreign currency translation method

1268 words - 6 pages from the foreign currency to the domestic currency. This is known as foreign currency translation. Consolidating financial statements between foreign subsidiaries and the parent companies would not be possible, if there is no foreign currency translation. Foreign currency translation may use different exchange rates for different financial statement items. There are three main translation methods: current rate translation method, temporary rate


1530 words - 6 pages uncoordinated federal acts that addressed privacy in some sort of manner. Preceding HIPAA, there was never standard authority for enforcement of abuse or fraud which applied to authorities and federal health care projects.Government recognized that the use of electronic technology had rose, therefore, there was potential for fraud and the need to establish strong security. People heard news stories about electronic information being lost or inadvertently

The Discussion of Conceptual Frameworks

4159 words - 17 pages members use their best endeavours to guarantee that the CF is practical. Moreover, in legal requirements, unlike Accounting Standards application of the CF is not mandatory for entities subject to the Corporations Law. Nevertheless, APS1 (Para21) reminds members that they should refer to the CF for guidance on an accounting treatment or a disclosure issue in the absence of an Accounting Standard or UIG Consensus View

Marks & Spencer

1756 words - 7 pages the ASC were known as Statements of Standard Accounting Practice (SSAPs). Those issued by Accounting Standards Board are known as Financial Reporting Standards (FRSs) .Financial StatementsBusinesses must operate profitability otherwise they will cease to exist. The financial statements, which are produced by the accounting department, will show the profit and loss which has been made and the financial position of the business.The two most

Comparisons of usa, uk, and china accounting systems

3599 words - 14 pages ) in 1970, which was later over time known as Accounting Standards Committee (ASC) that was the first recognizable standard setter in modern terms. It was renamed again in 1990 to the Accounting standards board (ASB). Along with the 7th directive the 8th directive was introduced in 1989 and led to a new regulatory body called the financial reporting council (FRC). The FRC is supported by the FRRP (Financial Reporting Review Panel) and ASB. The ASB

Electronic Data Interchange

4546 words - 18 pages standards, typically developed by specific industry or business groups, have provided commonly agreed upon formats for use in virtually every type of business communication."3 These standards provide a structured way of organizing information in a "transaction" format with definitions for the format and placement of each separate piece of data. "Translation to a standard format can be accomplished by internal systems or it can be done by a separate

Similar Essays

Australian Industry And Manufacturing : The Collins Class Submarine Program

2163 words - 9 pages manufactured and assembled prior to undergoing quality inspections. As with all the Australian sub-contractors, ASC Engineering would be the prime quality control authority to make sure all sub-contractors meet the project’s quality standards. However, Australian manufacturing had never had to compete on quality, and there were only 35 Australian companies in the early 1980s that were certified to meet international standards (Yule & Woolner, 2008

Jiangbo Pharmaceuticals, Inc. Restatement Analysis

1272 words - 5 pages should implement more effective internal controls to reduce any further misreporting. Should you have any questions, please contact [1] FASB, “Statement of Financial Accounting Standards No. 128 Earnings per Share.” February 1997. Web. October 19, 2013

Ifrs Essay

1825 words - 7 pages GAAP ( 2012). FASB’s Accounting Standards Codification (ASC) is the source of authoritative US GAAP for nongovernmental entities (DATABASE). As many companies began operating globally the need for consistent financial reporting standards arose. To meet this need, the International Accounting Standards Committee (IASC) was established in 1973 in London, England (Flesher 2008). The main goal of the IASC was to formulate International

Let There Be Light Essay

2364 words - 9 pages curiously wonder what purpose they serve, and why these automobiles left no smell of exhaust behind. Suddenly, you realize the connection: It was right under your nose the whole time! Just as the trees use sunlight to grow and reproduce, these solar powered cars convert the sun’s rays into energy that propels them onward. History In 1839, a French scientist named Edmond Becquerel experimented with electronics and found that he