There are several potential problems that can occur from the improper use of standard costs. Labor quantity standards and efficiency variances assume that production is labor-paced. However, output in many companies is determined by the processing speed of machines. Also, too much emphasis on meeting the standards may overshadow other important objectives. Discuss other potential problems that can occur from the improper use of standard costs.
Potential Problems from the improper use of standard costs:
Advantages and Disadvantages of Standard Costing and Variance Analysis:
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When a company relies on the standard cost variance reports to utilize them to improve profits for a company, many forget about the people on both sides - the employees and the customer. Managers so often use standard reports on a monthly basis instead of weekly or ...
Discusses the potential problems that can happen from the improper use of standard costs.
Approx over 400 words
Explains the problems from the point of managers and technology.