Chapter one of this work discusses the brief history of the case under study, statement of the problem, purpose of study, significance of the problem, scope of the study, limitations of the study, assumption of the study. Chapter three will consider design and methodology, selection of data and analysis, presentation and data analysis, test of hypothesis and interpretation of result. Finally, chapter five will contain the summary of findings, conclusion from the study, recommendations and suggestions for further research. In this regard, there is the need to prove whether standard costing is more variable and preferable option to other costing methods adopted for each product produced. After examining characteristics of the new manufacturing environment and benefits of upgrading the cost system, ways to update the traditional standard cost system are discussed.

Then they were able to get a meeting with the president and the controller to present a different picture – the analysis shown in the tables. The raw material used for production by this industry is got locally. It is obtained from Aikan Aluminium or first Aluminium Plc, Port Harcourt. He showed how the books were kept by a shoemaker ranging from this period onwards, there was a steady development of costing developed in the time of our early scientific management proponents such as Fredrick W. Taylor, Henry Fayol and others. Definition of planning variance A classification of variances caused by ex ante budget allowances being changed to an ex post basis. If standards are used as a way of encouraging employees to improve their performance, motivation could be provided in the form of higher pay if targets are reached or exceeded.

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These have included reducing inventories, the elimination of constraints and increased investment in automation. Despite these developments, both companies have made few changes to their existing standard costing systems. Also, although changes to the manufacturing environment had taken place, they were not of such a fundamental nature that wholesale bookkeeping for startups change to the accounting system was either required or could necessarily be justified in terms of cost/benefit. N2 – The paper contends that the strategic use of accounting at times of organisational change does not of necessity mean that organisations should adopt new accounting systems – such as activity based costing or throughput accounting.

• Thus our 1,200 units produced should have taken 6,000 hours (1.200 x 5 hours, and should have cost $12,000. (6,000 hours x $2 standard FOAR).
• If the Costing Method of the parent item is standard, then the labour aspect of the parent item is booked as the labour (capacity) cost defined in the routing.
• The lower margin and productivity figures were a result of the traditional income statement being used, and the non-lean-centric information presented by standard cost accounting.
• Luckily, the president of company A was not part of the initial negative decision, and only saw the lean analysis.
• The use of unqualified and inexperienced accountants by some industries pose greater problem to such industries for the accountants cannot adequately apply the accounting techniques required of them on standard costing.
• Review various roles of management accounting in social and organisational context.

If we subsequently purchase or manufacture a quantity of 10 at say, £11 then those 10 items are costed at £11. The staff of Ferdinand Aluminium Manufacturing industry is trained under the expertise acquired from A.I kalogeros (export) Limited, Cyprus. Another major problem centers on lack of adequate control of scarce resources by indigenous manufacturers. Most of the resources used, requires special storage facilities. Where they are stored before they are utilized to avoid spoilage. In most cases, the storage facilities may be beyond the reach of some manufacturers.

Standard costing

A lack of education on the use of accounting as a tool of management is very evident. The use of unqualified and inexperienced accountants by some industries pose greater problem to such industries for the accountants cannot adequately apply the accounting techniques required of them on standard costing. This is the standard cost of one unit and is the fundamental basis of budgetary planning. For example, if we are planning to manufacture 500 pairs of shoes then it is easy to use the cost card to calculate that the marginal cost will be £9,625 in total (500 x £19.25). In this case actual activity is greater than budgeted, leading to over absorption.