THE APPLICATION OF STANDARD COSTING TECHNIQUES IN MANUFACTURING COMPANY.(A CASE STUDY OFSEVEN UP BOTTLING COMPANY OWERRI)
This project work is designed to evaluate the application of standard costing techniques in a manufacturing company. Five chapters were exhausted in an attempt to achieve the above aims. Chapter one discussed the general introduction to study, the statement of the study, need for the study, objective of the study, scope of the study, limitations of the study, assumption of the study and TO PLACE AN ORDER FOR THE COMPLETE PROJECT MATERIAL, pay N3, 000 to: BANK NAME: FIRST BANK ACCOUNT NAME: OKEKE CHARLES OBINNA ACCOUNT NUMBER: 3108050531 After payment, text the name of the project, email address and your
names to 08064502337
TO PLACE AN ORDER FOR THE COMPLETE PROJECT MATERIAL, pay N3, 000 to:
BANK NAME: FIRST BANK
ACCOUNT NAME: OKEKE CHARLES OBINNA
ACCOUNT NUMBER: 3108050531
After payment, text the name of the project, email address and your names to 08064502337definition of terms. In chapter two, the related literature was reviewed. This covered the meaning of standard costing, its historical background of research problem, theories and models relevant to the research. It’s current literature based on the variable of the model and its summary of the chapter. Chapter three shows the systematic formal and technical ways adopted by the research design, population of study, sampling procedure and techniques, data collection method, questionnaire design validation of research instrument and description of data analysis and techniques. In chapter four, data collected from questionnaires responses are presented and analyzed using percentage method. Also hypotheses were tested and the results presented. The findings of the research are also discussed. The responses to the questionnaires are presented in a table format. We determine the sample size since the sample unit is too large and for effective coverage we use Yaro Yamen statistical tool. The sample of 157 respondents was drawn according to the proportion of the sampling unit strengths using the simple random sampling technique. Finally in chapter five conclusion and recommendations were given
There are many definitions of Accounting, but the presentation of the American Association is considered appropriate for this purpose. It describes Accounting as: “The process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information. Put differently, Accounting is concerned with providing both financial and non-financial information that will assist managers or decision makers to make good decision or informed judgements. Accounting is a language that communicates economic information to people who have an interest in an organization-managers, shareholders and potential investors, employees, creditors and the government. Different cost concepts and terms are often used in accounting reports. Managers who understand these concepts and terms are able to use the information provided, and avoid misuse of that information. Communication among managers is greatly facilitated by there being common understanding on the meaning of cost concepts and terms. Cost accounting can be defined as the collection, accumulation, classification, coding, analysis, processing and recording of cost information to assist management in planning, control and decision-making. It can therefore be positioned from this definition that cost accounting is concerned with the following:
- Preparing statement (e.g budget, costing)
- Cost data collection
- Applying costs to inventory, products and services.
The purpose of cost accounting is to provide detailed information for control, planning and decision – making. A cost is defined by (CIMA) as “the amount of expenditure (actual or notional) incurred on, or attributable to, a specified thing or activity. “It may also represents the total amount of expenditure incurred or yet to be incurred in the course of manufacturing a product or rendering a service. It is also possible to describe the word “cost as the total amount of resources scarified or foregone towards achieving a stated objective. However, if the word Cost is used as a verb, then it can be defined as to ascertain the cost of a specified thing or activity. The word “Cost’ can rarely stand alone and should be qualified as to its nature and limitations (CIMA).
From the above definition, it is obvious that cost can historical which represents the basis of cost ascertainment or futuristic, which helps in decision-making. Cost accounting is a specialized branch of accounting which applies costing and cost accounting principles method and techniques to sciences, art and practices of cost control and ascertainment of information derived there from the purpose of managerial decision making.
To achieve the goals of cost accounting certain systems have developed one of which is the standard cost under specific conditions.
Standard according to chambers English Dictionary are bases of measurement, a criterions and established or acceptable model like wise some accounting dictionaries defined standards as a measure of comparison for quantitative or qualitative, a criterion of excellence a room or a model.
Standard cost on their own are yardstick a predetermined cost under specifies condition.
Standard costing techniques according to Oweler and Brown in a method of cost accounting whereby statistics are prepared to show the standard cost, the actual cost and the different between these costs, The records are designed to show in detail how much each product operation should cost when a business is operating at a stated level efficiency and for a given volume of output. The word standard cost represents an estimated or a pre-determined total cost of product per unit for an organization. The process of estimating the total cost of production per units is described as standard Costing techniques. If the estimated total cost of products for a big organization is based on the total unit produced then, the procedure is described as budgeting system. Standard costing technique therefore represents an integral part of management accounting control technique which will also include budgeting system and responsibility accounting statement. Standard costing technique may either be viewed from the perspective of marginal costing technique or absorption costing technique. By relating standard costing technique with marginal costing technique, variance analysis will be determined on the total relevant cost of products excluding fixed overhead. But if it is viewed in the context of absorption costing then variance analysis will involve the total cost of produces to the organizations.
Through carefully planned and organized accounting procedures, the difference between actual and standard cost analyze and promptly report upon to the relevant officers. The later then takes correctives and preventive action and in addition makes use of the information for planning, Coordinating and controlling the operations of the units.
The standards which form the base of comparison should primarily be set by the manager who are directly involved in attaining these standards. The difference between the standard cost and actual cost are analyzed for managerial actions. Analysis of variance entails passing the variance into their constituent parts showing the causes of such variance from planned, for it is not sufficient to measure the difference between the actual result and standard, the difference should be interpreted.
More over, such variance should be reported to the management as soon can be taken. Then frequency of such reports depends on the operations of the company. It may be on shift basis, daily basis, weekly basis, monthly basis e.t.c companies that employ standard costing technique derive substantial benefits from it.
1.1 STATEMENT OF PROBLEMS
This study is carried out to assist the researcher proffer solution to the following issues.
- Standard costing and variance have been heard and read in pages of costing textbooks, the researcher study is carried out to know how standard costing techniques and variances analysis enhance managerial companies.
- Normally, the responsibility of setting standard rests on many hands the study will assist the researcher to know those who are responsible for setting standard in a manufacturing company.
- The types of standard, a manufacturing company uses to evaluate its managers performance since there are different types of standard.
- The need for variance analysis
- The frequency of reporting variance for managerial actions.
- The benefits attributable to the use of standard costing technique
- The causes of variance that needs managerial actions
- The period of standard cost revision
- The treatment of standard.
1.2 NEED FOR THE STUDY
The need for this study lies in its use by different segment of this society groups include:
- The study will equally be of great help to stuffy researcher on the field of standard costing.
- The study will equally be of help to the lecturer in the accountancy department in their lecture on standard costing techniques.
- Manufacturing companies will benefits from the study on area of standard costing application
- The study will also help management accountant to know if is of example for management action.
- OBJECTIVE OF THE STUDY
The objective of this study can be summarized as follows:
- To identify who has the responsibility to setting standard in a manufacturing company.
- To identify types of standard costing techniques a manufacture use to evaluate managers performance
- To find out the need if any of standard costing variance analysis.
- To identify the frequency of reporting variance of material actions.
- To find the limitation, if any of standard costing techniques.
- To ascertain the benefits, if any in the application of standard.
- To identify which causes of variance managerial action can be taken upon on reporting of such variance.
- To ascertain how often standard are revised and
- To find out how manufacturing company treat standard cost variance.
1.4 SCOPE OF THE STUDY
This study covers the officers and staff of the account department, personnel department and sales marketing department of an organization sector.
In carrying out the study, the researcher was constructed by some variable among which are limited financial resources and lack of data of some persons of interest.
1.5 ASSUMPTION OF THE STUDY
In the process of this study, the following assumption will be tested. The cost account ensure adequate availability of cost on which form the basis of comparison should primarily be set by the manager who are directly involved in attaining these standard.
Therefore, the companies that employ standard costing derives substantial benefit from it and it help to meet the cost expenditure needs in an organization. The costing techniques helps the companies to assist to identify an approaching cash shortage.
1.6 LIMITATION OF THE STUDY
The study meet with many difficulties and limitation. Some of which are the financial constraints, unavailable of the review and the unwillingness of some manufacturing company officials to disclose information which they think. Might be to the company or may of the long run hinder job promotion in the manufacturing company.
- DEFINITION OF OPERATIONAL TERMS
There are many definitions of accounting, but the presentation of the American Accounting association is considered appropriate for this purposes. It describes Accounting as the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of the information. It is also designed as the art of recording classifying, interpreting and reporting of financial transaction of a business entity.
BUDGETARY CONTROL: Is part of overall system of responsibility accounting within an organization. It is a system of accounting in which cost and revenues are analyzed in accordance with areas of personal responsibilities so that the performance of the budget holders can be monitored in financial terms budgetary control consist of:
- Establishing budget for each area of functional responsibility identifying the performance required in order that the objectives of the business as a whole may be achieved.
- The regular comparison of actual with budgeted results.
- Action resulting from this comparison , either to secure adherence to the defined objectives or to agree some modification of the original plan.
COSTING: This is the recording, classifying and appropriate allocation of expenditure for the determination of the cost of expenditure for the determination of products or services. The relations of this cost to sale values and the ascertainment of profitability.
COST ACCOUNTING: This is a specialized branch of accounting that serve in both external and internal reporting, cost accountant compute costs that are required for the financial statement, and tax reports, in internal reporting they collect cost data that can be used in the solution of particular management problem. It can also be defined as the application of accounting and costing techniques, method in the ascertainment of cost and analysis of savings or defect as compare to precious experience and standard.
MANAGEMENT ACCOUNTING: CIMA defines management accounting as “the application of the principles of accounting and financial management to create, protect, preserve and increase value so as to deliver that value to the stakeholders of profit and not –for-profit enterprises, both public and private. Management accounting is an integral part of management, requiring the identification, generation, presentation, interpretation and use of information relevant to:
- Formulating business strategy,
- Planning and controlling activities,
- Decision making,
- Efficient resources usage,
- Performance improvement and value enhancement,
- Safeguarding tangible and intangible assets,
- Corporate governance and internal control.
MANUFACTURING COMPANY: A company that produces or manufactures one or more-products, or services.
STANDARD: This is something that is used as a test on measure for weights, length, qualities and quantity or for required degrees of excellence.
STANDARD COSTING TECHNIQUE: Therefore represents an integral part of management accounting control technique which will also include budgeting system and responsibility accounting statement. Standard costing technique may either be viewed from the perspective of marginal costing technique or absorption costing technique. By relating standard costing technique with marginal costing technique, variance analysis will be determined on the total relevant cost of products excluding fixed overhead. But if it is viewed in the context of Absorption costing then variance analysis will involve the total cost of products to the organizations.
STANDARD COST: A pre-determined cost under a specified working conditions. This is designed as a method of costing that use pre-determined cost calculated in relation to a prescribed set of working conditions, technical specification and scientific measurement of materials, labour and overheads as to price and usage expected to apply during the period to which the standard cost relates.
STANDARD HOUR: The institute of cost and management accountant defines a standard hour as follow hypothetical hour which represents the amount of work which, should be performed in one hour under standard condition.
VARIANCE: This is the different between the standard cost and actual cost of production.
VARIANCE ANALYSIS: Is the process of classifying a given variance into its sub-variance. This is also a mathematical exercise used to isolate causes of variance
APPLICATION OF STANDARD COSTING TECHNIQUES IN MANUFACTURING COMPANY
———–THIS ARTICLE IS NOT COMPLETE————
To purchase complete Project Material, Pay the sum of N3, 000 to our bank accounts below:
BANK NAME: FIRST BANK
ACCOUNT NAME: OKEKE CHARLES OBINNA
ACCOUNT NUMBER: 3108050531
BANK NAME: FCMB BANK
ACCOUNT NAME: OKEKE CHARLES OBINNA
ACCOUNT NUMBER: 1475680026
After paying the sum of N3, 000 into any of our bank accounts, send the below details to our Phone: 08064502337
- Your Depositors Name
- Teller Number
- Amount Paid
- Project Topic
- Your Email Address
Send the above details to: 08064502337 on/before 24hours of payment. We will send your complete project materials to your email 30 Mins after payment.
bravoprojecthelp.com will only provide papers as a
reference for your research. The papers ordered and produced should be
used as a guide or framework for your own paper. It is the aim of
bravoprojecthelp.com to only provide guidance by which the paper should be
pursued. We are neither encouraging any form of plagiarism nor are we
advocating the use of the papers produced herein for