Standard Costing (2)

Question 1

Impact of ideal on behaviour?

Answer 1

Incentive to be seen as more efficient or may feel that goals are unattainable

Question 2

Impact of attainable on behaviour?

Answer 2

Provide a realistic by challenging target of efficiency

Question 3

Impact of current on behaviour?

Answer 3

Will not motivate employees to do anything more than they are currently doing

Question 4

Impact of basic on behaviour?

Answer 4

Less motivation from employees as they are easily able to achieve the standard

Question 5

Similarities of standards and budgets (motivation)

Answer 5

Their impacts on employees’ motivation

Question 6

Similarities of standards and budgets (budget)

Answer 6

Standards generally form the basis for the budget

Question 7

Similarities of standards and budgets (control)

Answer 7

Both used for control

Question 8

Differences between standards and budgets (unit)

Answer 8

Standards: By unit
Budgets: In total

Question 9

Differences between standards and budgets (areas)

Answer 9

Standards: For areas of repetition
Budgets: All areas

Question 10

Differences between standards and budgets (targets)

Answer 10

Standards: Financial and non-financial targets
Budgets: Financial targets

Question 11

Is standard costing becoming less relevant?

Answer 11

Yes, in modern environment as previously when manufacturing was mainly of standard, mass produced products

Question 12

Where does standard costing work best?

Answer 12

In a stable environment, modern environment is rapidly changing

Question 13

Criticism of standard costing (revisions)

Answer 13

Regular revisions to the standard are required, Process expensive and time consuming

Question 14

Criticism of standard costing (further improvements)

Answer 14

Meeting the standard should not necessarily be accepted as satisfactory if further improvements can be made

Question 15

Criticism of standard costing (customised products)

Answer 15

Techniques associated with standard costing are less useful in a modern envirnoment of customised products

Question 16

How should standards be reviewed and revised?

Answer 16

Should be reviewed regularly and revised when there is a change in basis upon which they were set

Question 17

How should flexed budgets be used to show?

Answer 17

What cost and revenues should have been for the actual level of activity

Question 18

What do budgetary control involves?

Answer 18

Drawing up budgets for the areas of responsibity for individual managers and regularly comparing actual results against expected results

Question 19

Where are individual managers held responsible?

Answer 19

For investigating differences between budgeted and actual results, and are then expected to take corrective action or amend the plan in the light of actual events