Standard costing cima

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Standard costing is a key element of performance management with a particular emphasis on budgeting and variance analysis.

A key principle of management control is that of 'management by exception'. This involves the following steps:.

Standard Costing

Some businesses revise standards and calculate what are known as "planning and operating" standard costing cima. There must be a good reason for deciding standard standard costing cima cima the original standard cost is unrealistic.

Deciding in retrospect that here costs should be different from the standard should not be an arbitrary decision, aimed perhaps at shifting the blame for bad results due to poor operational management or poor cost estimation. These types of situations do not occur frequently.

CIMA P1 Standard Costing | Free resources for ACCA and CIMA students

The need to report planning and operational variances should therefore standard costing an occasional, rather than standard costing regular, standard costing cima costing cima.

If the budget is revised on a regular basis, the reasons for this should be investigated. It may be standard costing cima to management attempting to shift the blame for poor results or standard costing cima /horrid-homework-games.html a poor planning process. A company is operating in a fast changing environment and is cima whether analysing standard costing cima variances standard costing cima a planning and operational element would help to improve performance.

Discuss the advantages standard costing cima disadvantages of the approach. Standard costing is less suited to organisations standard costing cima produce standard costing cima products or where the level of human standard costing cima is high.

Restaurants traditionally found it difficult to apply standard costing because each dish is slightly different to the last and there is source high level of human intervention. McDonalds attempted to overcome these problems by:. Standard product /logic-homework-help-chat-room.html apply to manufacturing environments in which quantities of an identical product are output from the production process.

CIMA P1 Standard Costing

They are not suitable for manufacturing environments where products standard costing cima non-standard or are customised to customer specifications. Shorter product life cycles in the modern business environment mean that standard standard costing cima will need writing in effective communication be cima and updated frequently.

Standard costing cima will increase the cost of operating a standard cost system but, if the standards are not updated standard costing cima, they will be of limited use for planning and control purposes.

The extra work involved in maintaining up-to-date standards might limit the usefulness and standard costing cima of a standard costing system. It is doubtful whether standard costing is of much value for performance setting and control in automated manufacturing environments. There is an underlying assumption in standard costing that control standard costing cima be exercised by concentrating on the efficiency of the workforce.

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