Standard costing and variance analysis techniques are most often associated with manufacturing businesses. You have been contracted by the owner of a small advertising agency to evaluate the use of standard costing techniques for the services provided by his firm.
Discuss whether you believe standard costing techniques can be applied to this service-based business. In your discussion, highlight the pros and cons of using such a system to track costs for an advertising business. Make a recommendation to the business owner, supported by factual information.© BrainMass Inc. brainmass.com October 16, 2018, 11:14 pm ad1c9bdddf
First, standard costing and variance analysis techniques are most often associated with manufacturing businesses; hence some managers in the service industry might think that standard costing and variance analysis are not appropriate techniques. However, the very definition of standard costs indicates that is can also be applied to service-based organization. Standard cost is the total cost that the company believes a unit of a product or the single operation of a process should cost taking into account ...
The pros and cons for using standard costing techniques for a service-based business are outlined.
In well-developed markets, there is a mature set of players with comparable levels of strengths in terms of product development-hence all product offerings tend towards parity. Consumer tastes are also well defined. Therefore, product offerings need to go beyond satisfying basic needs.
1. Discuss the importance and effectiveness of differentiating based on service?
2. What key marketing concepts and principles can someone employ to achieve good results?
3. What key lessons can someone learn by incorporating this strategy?