Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 9

Which of the following should a firm use as the standard in assessing production efficiencies: standards based on ideal performance, standards based on attainable performance, or standards based on the average of recent historical performance? Explain.

Step 1 of 2

Direct cost & Sales variance & Control Systems

Sales variance is the breakdown of sales volume and which includes components like manufacturing cost (which is a direct cost), labour cost, material costs. Certain procedures are set in place, which help the organisation to control performance, which will include components from planning to evaluation. Similarly, operational & financial controls are also applied for cost control in their respective areas.