Escolar Documentos
Profissional Documentos
Cultura Documentos
Chapter11
Didyoueverthinkaboutwhyyouwereacceptedtotakethisclassorattendtheschoolinwhichyouare
enrolled?Probablyyouweresubjectedto,andmet,veryspecificstandards.SowhatexactlyARE
standards?Standardsareawayofpredeterminingacertainlevelofqualityorcost.Tobeacceptedat
aparticularschool,youneedtomeetcertainacademicstandardsestablishedbytheinstitution.The
qualityofaparticularschoolmaybedeterminedbaseduponthestandardsestablishedforits
acceptanceofstudents.
Standardsareawayofevaluatingperformance,butalsoawayofensuringacertainlevelofquality.So,
whatisthedifferencebetweenastandardandbudget?Abudgetrepresentsaplanfortotal
expenditureswhereasastandardexpressestheexpectationonaperunitbasisbytakingqualityinto
consideration.
Standardcostsofferanumberofadvantages.Theyfacilitatemanagementplanning,promotegreater
economy,areusefulinsettingsellingprices,contributetomanagementcontrol,permitmanagementby
exception,andsimplifythecostingofinventoriesandreduceclericalcontrol.
Standardscanbeestablishedateitheranidealoranormallevel.Anidealstandardisonethat
representsexpectationsassumingtheorganizationisoperatingatanoptimumlevelofefficiencyand
effectiveness.
Somemanagersbelievethatestablishingstandardsatanoptimumlevelencouragesemployeesto
performatahigherlevelthaneventheythoughtcapable.Criticsclaimthatidealstandardsfrustrate
employeesbecausethestandardissoperfectthatitmaybeunattainable.Normalstandardsrepresent
efficientlevelsofperformancethatareconsideredtobeattainableassumingnormaloperating
conditions.Somemanagersbelievethatestablishingstandardsatanormallevelismoremotivatingto
personnelbecauseitconsidersfactorssuchasrestperiods,breakdownsandotherdeviationsfromideal
conditions.
Standardsinamanufacturingorganizationareoftenestablishedfordirectmaterials,directlaborand
manufacturingoverhead.Actualpriceandquantityarecomparedtothestandardpriceandquantity,
andthevariancesaredeterminedtobeeitherfavorableorunfavorable.Inestablishingthedirect
materialspricestandard,factorssuchasthepurchaseprice,freight,storage,andotherrelatedcosts
wouldbeconsidered.Thedirectmaterialsquantitystandardwouldconsiderfactorssuchasmaterial
quantityrequired,andallowancesforwasteandspoilage.Thedirectlaborpricestandardwould
considerwagerates,costoflivingadjustments,payrolltaxesandfringebenefitcosts.Thedirectlabor
quantitystandardwouldfactorinproductiontime,resttimeanddowntime.Manufacturingoverhead
isallocatedaccordingtoapredeterminedoverheadrate.Rememberthepredeterminedoverheadrate
isestablishedbydividingbudgetedmanufacturingoverheadcostsbyacostdriveroractivityindex.The
standardmanufacturingoverheadrateisthepredeterminedoverheadratemultipliedbytheactivity
indexquantitystandard.
Thestandarddirectmaterialscostisdeterminedbymultiplyingthestandardquantitybythestandard
price.Thesameisdonefordirectlaborandmanufacturingoverhead.
Thestandardcostperunitisnowdeterminedbyaddingthesumofthestandardcostscalculatedfor
directmaterials,directlaborandmanufacturingoverhead.Inshort,thiswilltellmanagerstheexpected
costtomanufactureoneunitofproduct.
Oncethesevariousstandardshavebeendetermined,theevaluationprocessisperformedby
determiningthevariancesforeachaspectofproductcostsintermsofquantityandprice.Thisallows
managementtomonitorperformanceaccordingtotheestablishedstandardsandmakeanynecessary
adjustmentstotheoperations.Rememberthemateriality,orsignificanceofthefavorableor
unfavorablevariances,isanimportantelementindeterminingwhichvariancestoinvestigatefurtherfor
causes.
Letsassumethatwehavesomevariancesintermsofdirectmaterials,directlaborandmanufacturing
overheadandthattheyarematerialinnature.Whatmightbesomepotentialcauses?Some
explanationsmightbethatdirectmaterialswerepurchasedatahigherorlowercostthanexpected,or
thequantityofmaterialsneededwerelessormorethanthestandard,duetospoilageorwaste.Direct
laborratesmayhavebeenhigherorlowerthanexpectedduetotheskilllevelofthepersonnelusedin
themanufacturingprocess.Directlaborquantitymayhavebeenmoreorlessthanthestandarddueto
theactualamountoftimeusedtomanufacturetheproduct.Manufacturingoverheadmayresultina
varianceduetohigherorloweruseofindirectmaterialsorindirectlaborthanexpected.Thereporting
ofthesevarianceswillbemadetotheappropriatedepartment:purchasingformaterialspricing
variancesandproductionforallothervariances.Financialstatementsarepreparedinawaythat
communicatescostofgoodssoldandgrossprofitatstandardcosts;whilevariancesareitemizedfor
priceandquantityvariancesformaterials,laborandoverhead.
Thereisanapproachforcompletingawiderangingperformanceevaluationacrosstheorganization
calledthebalancedscorecard.Thisapproachisgainingpopularitybecauseittakesintoconsideration
bothfinancialandnonfinancialmeasurementsinestablishingarelationshipbetweenperformance
measurementandorganizationalgoals.Thescorecardevaluatesperformancefromthefinancial,
customer,internalprocess,andlearningandgrowthperspectives.Thetheoryisthatbyeffectively
balancingtheseperspectives,theorganizationcanmoreeffectivelylinktheirobjectivesandtie
performancemeasurementtotheoverallgoalsoftheorganization.