STANDARD COSTING AND CONTROL BY VARIANCE ANALYSIS
Standard costing and control by analysis of variance has been a very important mater in every manufacturing. The need for a through research and critical analysis of this issue form the basis and the aim of this job. To facilitate reading and understanding of this write up, the writer has categorized his work into chapters. Chapter one begins with the Background of the study, statement of the problem, purpose of the study, research objectives, different between research objectives and purpose of the study, scope and limitation of the study, significance of the study and definition of terms involved. In chapter two, we have review of related literature, types of standard, costs cites for setting standards, preliminaries in establishing a system of standard costs, variance, variance classification and favorable and unfavorable variances. Finally, chapter three deals with discussion of findings, conclusion and recommendation.
TABLE OF CONTENT
1.0 BACKROUND OF THE STUDY
1.1 STATEMENT OF THE PROBLEM
1.2 RESEARCH OBJECTIVES
1.3 PURPOSE OF THE SUDY
1.4 DIFFERENT BETWEEN RSERACH ONJECTIVES
AND PURPOSE OF THE STUDY
1.5 SCOPE AND LIMITATION OF THES STUDY
1.6 SIGNIFICANCE OF THE STUDY
1.7 DEFINITION OF TERMS INLOVED
2.0 REVIEW OF RELATED LITERATURE
2.1 TYPES OF STANDARDS
2.2 PRINCIPLES OF SETTING STANDARDS
2.3 PRLIMINARIES IN ESTABLISHING A SYSTEM OF STANDRAD COSTS.
2.4 VARIANCE ANALYSIS
2.5 CONTROLLABLE AND UNCONTROLLABLE COST VARIANCE
2.6 VARIANCE CLASSIFICATION
2.7 FAVOURABLE AND UNFAVOURABLE VARIANCE
3.0 DISCUSSION OF FINDINGS
1.0 BACKGROUND OF THE STUDY
Unplanned actions cannot be controlled for control entail keeping performance in the form control is compelling actions it conform to plans. Planning and control of costs are useful for efficiency, productivity and profitability in an business organization. Cost plans come in many categories of which standard costing is involved.
Standard costing is a system of cost accounting which is designed to shoe in detail how much each product should cost to produce and sell when a business is operating at a stable level of efficiency and for a given volume of output. On the other hand, variance analysis is simply the explanation of the causes of deference between actual and preplanned or standard performance when an activity takes place.
1.1 STATEMENT OF PROBLEM
(A) Difficulties arise with too frequent revision of standards especially ion an inflationary period. This makes standards to lose their control and motivational effects.
(B) It may be time consuming and costly to apply and to maintain up to alate.
(C) No recognition is given to both top management and users of accounting information.
(D) Failure to take adequate immediate actions. On cost variance reported to the management destroys the proper objectives of standard costing.
1.2 RESEARCH OBJECTIVES
The objectives of the research are as follows:
(A) To ascertain how widely standard costing is used or applied in industries.
(B) To ascertain what areas standard costing techniques are being applied .
(C) To ascertain attitudes of workers towards the implementation of the technique.
To find out if any, short coming arising from implementation of the technique in industries.
(E) And finally to recommend remedies for already observed lapses as well as discovering possible necessary actions that could be done to improve on the usefulness of the technique as an effect management tool.
1.3 PURPOSE OF THE STUDY
(A) This is to ascertain whether companies understand the system, possibly if they do, how has the system helped them to achieve maximum efficiency in the production process ?
(B) Whether the system assists companies in their decision making process, faxing of prices as a control of cost, reduction of costs and elimination of unprofitable products.
1.4 DIFFERENT BETWEEN RESEARCH OBJECTIVES AND PURPOSE OF SUDY
RESEARCH OBJECTIVES: To develop a fundamental understanding of hydrologic conditions and contaminant transport process in arid regions. Ultimately, the research is in tended to advance the state of hydrologic science and to provide scientific information for those making decisions concerning waste isolation and water resources management in desert environments.
PURPOSE OF THE STUDY: To build on the development feasibility and land use study conducted by the city in 1999-2000 which recommended that the city explore creation of a business park near gold strike park. Secondly to further build on the pilot Brown fields Assessment project that was made possible for and EDA grant. See executive summary of Brown filed Assessment and map of pilot Browfild are Assessment sits for. Finally to explore redevelopment options for strategically located properties in collaboration with are property owners, neighbors and the government entitles.
1.5 SIGNIFICANCE OF THE STUDY
This project will be of immense importance to students who are intending to make more research on standard costing and control by variance analysis in manufacturing industries. As that is not enough, it will be of immense importance of top management accountants and other officials of top management by giving them a true and detailed knowledge on the positive effects of setting standards, ways/ methods of setting standards and how to use the technique to achieve production control efficiency and effectively there by leading is cost minimization.
It also reveals the benefits why non-accounting senior staff of organization should embrace the technique rather than seeing it as a problems to their freedom of action with wrong impression that thy are directed down to the last detail on how work should be done.
Finally, it highlights some of the major problems that are militating against the costing technique and the best possible ways through which problems can be handled.
1.6 DEFINITION OF TERMS
(A) STANDARD COSTING: It is a costing technique which establishes predetermined estimate of the cost of products and services and than compares these predetermined costs with actual costs.
(B) VARIANCE ANALYSIS: This is the process by which the total difference between the standard and actual costs is sub –divided.
© COST VARIANCE : It is the difference between the standard or budgeter costs and the comparable actual cost for a particular period.
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