Standard Costing and Variance analysis
IS STANDARD
COSTING OBSOLETE?
Department of Accountancy
University of Kelaniya
What is Standard costing?
Standard costing is technique which
establishes predetermined estimates of the costs of products and services and then compares these predetermined costs with actual costs as they are incurred.
Management Accounting
2
What is Variance?
The difference between a cost's actual amount and its budgeted or planned amount
Unfavorable cost variance
Actual cost > Budgeted Amount
Favorable cost variance
Actual cost < Budgeted Amount
Management Accounting
3
RESEARCH ARTICLE
Purpose:- This study aims to provide evidence on the extent to which companies in Malaysia use standard costing. It also examines the differences in the use of such techniques between local Malaysian firms and Japanese affiliates
Methodology:-From the industrial and consumer products sectors listed on the Kuala Lumpur Stock Exchange and 21
Japanese affiliates in Malaysia, 66 companies were surveyed.
Keywords:-Standard costs, Management Accounting, Cost reduction, Budgets
Management Accounting
4
PROBLEM OF THE RESEARCH
Many authors have predicted that,
Shorter product life cycles
Advanced manufacturing technologies
Decreasing emphasis on labour in the production process
Global competition
May lead to the demise of standard costing.
Management Accounting
5
VARIABLES
1.
Use of standard costing
2.
Views on the various functions of standard costing
3.
lists various methods of setting labour and materials standards followed by the type of standards that they practice 4.
frequency with which standards are reviewed
5.
Respondents the method used to determine whether or not a particular variance should be investigated
6.
Respondents to indicate the importance of particular variances such as material usage, material price, material mix and various other variances, for control purpose
Management Accounting
6
PREVIOUS RESEARCHES FINDINGS
The
survey is conducted in New
COSTING OBSOLETE?
Department of Accountancy
University of Kelaniya
What is Standard costing?
Standard costing is technique which
establishes predetermined estimates of the costs of products and services and then compares these predetermined costs with actual costs as they are incurred.
Management Accounting
2
What is Variance?
The difference between a cost's actual amount and its budgeted or planned amount
Unfavorable cost variance
Actual cost > Budgeted Amount
Favorable cost variance
Actual cost < Budgeted Amount
Management Accounting
3
RESEARCH ARTICLE
Purpose:- This study aims to provide evidence on the extent to which companies in Malaysia use standard costing. It also examines the differences in the use of such techniques between local Malaysian firms and Japanese affiliates
Methodology:-From the industrial and consumer products sectors listed on the Kuala Lumpur Stock Exchange and 21
Japanese affiliates in Malaysia, 66 companies were surveyed.
Keywords:-Standard costs, Management Accounting, Cost reduction, Budgets
Management Accounting
4
PROBLEM OF THE RESEARCH
Many authors have predicted that,
Shorter product life cycles
Advanced manufacturing technologies
Decreasing emphasis on labour in the production process
Global competition
May lead to the demise of standard costing.
Management Accounting
5
VARIABLES
1.
Use of standard costing
2.
Views on the various functions of standard costing
3.
lists various methods of setting labour and materials standards followed by the type of standards that they practice 4.
frequency with which standards are reviewed
5.
Respondents the method used to determine whether or not a particular variance should be investigated
6.
Respondents to indicate the importance of particular variances such as material usage, material price, material mix and various other variances, for control purpose
Management Accounting
6
PREVIOUS RESEARCHES FINDINGS
The
survey is conducted in New