Standard Costing (4)

Question 1

Should managers be held accountable for costs over which they have no control?

Answer 1

They shouldn’t

Question 2

An example of when a production department maanger be held responsible for repair costs in their department?

Answer 2

If the production department’s staff treat their equipment badly

Question 3

An example of a particular cost where there might be responsibility of two or more managers?

Answer 3

Costs of raw materials might be the responsibility of purchasing manager (prices) and production manager (usage)

Question 4

How should reporting work for allocating a particular system?

Answer 4

A reporting system must allocate responsibility appropriately

Question 5

If charging the production department with some of the costs of the maintenance services?

Answer 5

Overuse is discouraged and production manager more likely to question activities of maintenances department, resulting in a reduction in maintenance costs