Accounting
Instructions:
1. Read: “Standard costing and its role in today’s manufacturing environment” by Mike Lucas. This paper will be useful in the discussions required in parts b, c, and e, below.
2. Prepare a typed paper (2 pages) which presents/discusses the following (in the order listed):
Body of Paper.
A. Briefly discuss what is meant by “favorable” and “unfavorable” in describing material and labor variances.
B. Discuss the three most significant advantages of standard costing.
C. Discuss the three most significant disadvantages of standard costing.
D. Are more firms adopting/dropping the use of standard costing? Why?
E. Explain the calculation of material and labor variances and the proper interpretation of variances. Explain why any calculated favorable variance may, in fact, be unfavorable. Explain why any calculated unfavorable variance may, in fact, be favorable.
F. Discuss behavioral issues arising from the use of standard costing.
Formatting of report: Microsoft Word format. Use one inch margins (top, bottom, sides). Double space and use a 10 point font.
