I need 1 responses to each student discussion board post. Please keep separate and in order. each post should be at least 150 words each with references Turnitin is being used to check for plagiarism and Please use APA format. 300 words total
Collapse Subdiscussion Brandy Havens
Brandy Havens
XXXXXXXXXX:52pm Apr 17 at 12:52pm
Hi Marcus. You made some excellent points regarding the potential disadvantages of using a standard costing system. Operational managers will, without question, be pressured to meet those standards. Now, let’s say that we have an unfavorable variance one month for direct labor. Upper management tells the plant manager that they expect to see some improvement in the following month.
Class, how might the plant manager try to eliminate this unfavorable variance?
Anna Williams
XXXXXXXXXX:53am Apr 17 at 3:53am
Standard Cost System
In Chapter 8 of the text, Schneider XXXXXXXXXXexplains, “A standard cost for a product is the amount that management believes one unit of product should cost and consists of a price standard (a generic term indicating price for materials, rate for labor, and rate for factory overhead) and a quantity standard (a generic term indicating quantity for materials, time for labor, and activity or volume for factory overhead)” (p.318). To put simply, standard cost describes the price of a product. Basically, anything that is associated with a manufacturing company’s costs is considered a component of a standard cost such as the overhead costs, direct labor and direct material of producing a product.
The advantages of a standard cost system include the fact that it aids in cost control, cost management, decision making and recordkeeping (Schneider, XXXXXXXXXXIn contrast, the drawbacks include strict standards and variances that can have a very negative impact on production. These variances include labor variances, material usage variances, price variances as well as labor rate and efficiency variances (Schneider, XXXXXXXXXXAll these variances can attribute to time being wasted, unhappy employees, price discrepancies and other efficiency problems that disrupt production. Thus, I believe that the most effective or suitable circumstance to use a standard cost system is when the manufacturing company’s process is simple, when the standards can easily be changed to create a more effective/efficient production process or when the amount of negatively impacting variances are low.
References
Schneider, A XXXXXXXXXXManagerial Accounting: Decision making for the service and manufacturing sectors (2nd ed.) [Electronic version]. Retrieved from https://content.ashford.edu/