Friday, 17 April 2015
لسَّلاَمُ عَلَيْكُمْ وَرَحْمَةُ اللهِ وَبَرَكَاتُهُ
Disini ingin NNA kongsi
sedikit maklumat daripada kos subjek iaitu Management Accounting yang NNA ambik
sem nie. Ianya tentang subtopic iaitu Limitation of Standard Costing dan versi
bahasa inggeris. J
FOLLOWING
ARE THE ADVANTAGES OF STANDARD COSTING:
(i) Help to
Management the functions of the management are planning, coordination,
organization, motivation and control. Standard costing helps the management in
performing its functions in the following manner:
(a) Planning: Activities are studied, carefully, before hand and standards
are fixed on an attainable basis, with effort. This is a useful exercise in
business planning. Standard costing instills in the management a habit of
thinking, in advance.
(b) Coordination: Standards are fixed for different functions such as
purchasing, selling, production, accounting etc. Coordination is achieved
between the different functions, through the working of standard costing.
(c) Organization–Facilitates Delegation of Authority: Shortfalls are to
be identified for corrective action. So, organization chart is prepared which
establishes the responsibilities of the executives. With the help of
organization chart, authority is defined and responsibility for corrective
action is identified, in the very beginning. This facilitates better achievement
of results as authority and responsibility go hand in hand for better
performance. Standard Costing and Variance Analysis 393
(d) Motivation: The standards fixed are to be achieved or excelled by
the concerned staff, maintaining the quality of the product. Plans can be
formulated to reward with suitable incentives. The incentive system motivates
the employees to achieve or even excel the levels expected of them. This
increases efficiency and productivity.
(e) Control: By comparing actual performance with standards fixed,
immediate remedial action can be taken on the basis of variances, so revealed.
Standard costing is an important technique of cost control. Cost control is
more effective, when standards are constantly reviewed and prompt action is taken
on those lines.
(ii) Measurement of
Efficiency Standard cost provides a yardstick to measure efficiency or
inefficiency. This makes possible application of the principle “Management by
Exception”. The operations, which meet standard performance or reaches closely,
are ignored. The attention of the management would be drawn to those distinct
areas, where action is essentially needed.
(iii) Fixing Prices
& Formulating Policies Prices may be fixed, by adding the standardised
margin of profits to standard cost. It enables the management to quote prices
for potential orders to push sale of products. This serves as a valuable aid to
management in formulation of pricing policies.
(iv) Facilitates
Control and Decision-making Variance analysis provides the ready means for
interpretation of information and decisionmaking to exercise control in the
areas, where attention is required. Ready reports serve as guide for immediate
action.
(v) Eliminates
Wastages by fixing standards, certain wastes such as material wastages,
idle time and machine hours etc can be reduced.
(ix) Price Quotations
Standard costing is useful to prepare cost estimates. Quotations can be
sent to secure orders and increase the business. In short, standard Costing is
widely used as it is a very effective managerial tool for cost control.
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