Analysis of Standard Costing in Management Accounting Report

This report provides a comprehensive analysis of standard costing, a crucial management accounting technique. It begins with an executive summary and an introduction, outlining the core concepts and objectives. The report then delves into an explanation of standard costing, detailing its purpose, benefits, and drawbacks, as well as its role in cost regulation and profit maximization. Two research studies are examined: one focusing on the telecommunications sector and the other on the oil and gas industry in Nigeria. The report explores the research questions, methodologies, and findings of each study. A comparative analysis highlights the similarities and differences between the studies, focusing on their approaches to standard costing implementation and its impact on profitability and cost control. The report concludes with a summary of key findings and insights into the effective application of standard costing for organizational success. It emphasizes the importance of understanding standard costing in different contexts and its role in managerial decision-making, resource allocation, and performance evaluation. The report utilizes academic references to support its claims.

Management Accounting 1
Managerial Accounting

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Executive Summary
Different analyzing the costing techniques have been explained in this report, within the
organization by various management accounting techniques. For the numerous activities of the
organization to run smoothly, the growth as well as to gain, the sustainability the standard
costing was set by the organization. In this report, numerous ways have been identified through
which the setting of standards helps in regulating the cost and obtaining the profits. A research
shows that by maintaining the effectiveness the understanding of it can be enhanced. Along with
this, the different types of the results are also obtained from the analysis. Both the studies have
been compared so that the differences, as well as the similarities between them, can be identified.

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Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
A) An explanation of Standard Costing............................................................................................5
C) Similarities and differences in two studies...................................................................................9
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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Introduction
The main motive of this report is to analyze that how the tool of management accounting helps in
attainment of growth as well as success for an organization. In this report, two articles have been
taken into consideration for the correct use of the standard costing so that the correct results for
same can be revealed. Also, different questions are taken into consideration which has to be
answered throughout the report so as to produce the better outcomes. The report compares both
the studies in the later part so that the similarities and the variations between both of them can be
identified and the conclusion for same can be determined accordingly. The findings and the
outcomes of both the studies are also determined. This will help the managers of the organization
in taking appropriate decisions related to the operations of the business. The knowledge that
what is the significance of standard costing within the organization and how it is helpful to
management accounting in the Australian Companies is given in the overall report.

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A) An explanation of Standard Costing
The actual focus of all the organizations is to increase the profits and it can be achieved through
two ways either by maximizing profits or minimizing the cost(Ahmed & Duellman, 2013).
Standard costing is one of the techniques which compare the actual performance against all the
standards set by the organization which are used for the performance appraisal and for
smoothening its operations. The standard costing is one of the ways which helps in regulating the
cost so that the profitability of organization can be attained. The internal part of the management
accounting tool is obtained by the organization which is used for controlling and with it also
includes the system of budgeting as well as the responsibility for the statements of accounting.
The standard costing can be defined as the system of accounting which makes the use of the
predetermined the cost that is related to the products or the services which are supplied
(Abdullahj, et. al., 2015).
It has been observed that variance will be evaluated in the total cost of the product by excluding
the fixed overheads that the standard costing when compared with that of the marginal costing
technique then the. The standard costing is the cost which is predetermined that how much of the
cost should be kept specific under all the working conditions, determined in the report. There are
various types of the standard costing some of them includes attainable standard, an ideal
standard, basic, current standard, labour standards and material. The resources should be set so
that the maximization of the revenues can be done which in turn will help in maximizing the
profits and cost of labour can also be controlled accordingly. The main motive of the
management is to regulate the standards for the material and the cost of the materials (Lueg &
Norreklit, 2012). The actual cost is compared with the standard costs so that the difference can

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be calculated and accordingly the actions can be taken by the managers so that the actual cost of
the organization confirms with that of the standard cost (Abdullahj, et. al., 2015).
There are various benefits not only to organizations but the employees as well so that the
accountability, as well as the effectiveness within the organizational structure, can be maintained
when the standard costing is used in the organization (Ilg, et. al., 2016). Along with this, it also
helps in determining the performance through correct monitoring so as to ensure the appraisal
and also regulates the differences which help in analyzing the shortfalls and then takes actions so
as to improve those for the future perspective (Akenbor and Agwor, 2015). It also helps in
motivating the employees so as to achieve the organizational goals and objectives which are laid
by the organization by creating the targets which are realistic. The prime advantage is that it
helps in gaining fast and easily available reports to the management so that management can take
the actions accordingly (Ahmed & Duellman, 2013).
The standards which are set by the organization may also get affected due to the changes in the
price due to a persistent change in inflation which in turn leaves the standards to be unattainable.
Apart from numerous benefits involved in the standard costing technique, it also includes
numerous drawbacks which could be setting of the standards that are unreachable and are not
desirable to achieve, instability in politics, due to changes in macroeconomic policies, issues in
determining the needs of consumers, also the variation in the labor rate per hour in the
organizations which basically relies upon the variables of economics (Akenbor and Agwor,
2015).
By the use of standard costing, calculation of the profits is also made possible which results in
enabling the managers to take the important decisions for the organization accordingly. Later, the
implementations for the improvements can be taken by analyzing the sectors which lead to the

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change. To enhance the productivity of the business the distribution of the resources to all the
departments should be done in an appropriate manner which also leads to an increase in the
efficiency. This is the actual method which will allow the management accountants to remove
the irrelevant actions and take steps to maintain effectiveness.
B) Purpose of two studies and their research questions
The main focus of both the theories lies in the appropriate knowledge about the standard costing
method. In the first theory, there is an explanation about testing the impacts of the standard
costing on the acquisition of profitability of telecommunication companies so as to test the
relationship among the standard costing and the profitability gained by the telecommunication
companies (Miller-Nobles, et. al., 2016). To obtain the actual analysis of it, the descriptive
survey method has been used. Analysis can be done with this the secondary data, as well as the
interviews, are conducted (Ward, 2012). Later, the outcomes are determined which helps to
conclude the final results. Analysis of the profitability can easily be done as this method also
ensures that the data collected is correct and necessary for the business. The questions arise here
is for the calculation of benefits for the use of standard costing so that the advancement in the
profit gains of organization can be analyzed (Akenbor and Agwor, 2015). Another question
which arises here is about the effective application of the standard costing so that its effect on the
profitability can be determined. These reports are presented to the management as per the
accounting reports which are prepared in advance (Demski, 2013). The actions should be taken
by the top authorities and then the growth in the business can be achieved. To answer all the
questions in the effective way the standard costing method will be used and also maximize the
profits the cost control techniques will be used which in turn will help in achieving sustainability
as well as profitability within the organization.

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Another report focuses to study about the relationship between the cost control in the oil, the
standard costing and gas industry of Nigeria. Primary as well as the secondary data both have
been used such that the essential information can be concluded and the expediency of the study
can be maintained. For determining the relationship, the hypothesis has been improved. The
research question which has been taken care is about determining the cost controls if standard
costing gets implemented within the organization (Akenbor and Agwor, 2015). The actual
respondents of the individuals can be analyzed as the primary data is collected and then the
questionnaires are improved and then actions for the future growth of the organization can be
attained accordingly. The theory will also help in determining the various aims of the cost
through which the cost can be controlled and the sustainability of the organization can be
achieved. It has also been found that the firm is more efficient in terms of material, labour as
well as overheads as much as the organization practices the standard costing technique (DRURY,
2013).
Therefore, it is seen in the above report that both the studies have elaborated about the standard
costing. It will also help in understanding the standard costing in the systems of accounting so as
to ensure that the resources are effectively and efficiently consumed and the cost of the
organization is regulated. Also, the benefits, as well as the drawbacks involved with it, are also
analyzed which will help the business to acquire success. This will also help in getting the
analysis of the different areas so that the sectors of the development can be analyzed (Miller-
Nobles, et. al., 2016).

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C) Similarities and differences in two studies
On doing the analysis there were different observations which have been drawn from two of the
theories and it has been found that there are some of the similarities in the observations of both
while some of the variations were also included. These findings are analyzed so that it may help
in drawing a proper conclusion as well as the calculation may be achieved.
The similarity which appeared in both the studies was related to the acceptance of the standard
costing technique so that it bumps upon the organization which can be analyzed. Along with this,
it has also been observed that both the organizations are using the proper accounting technique
so as to conclude the better outcomes (Abdullahj, et. al., 2015). The primary as well as the
secondary methods, to conduct the research is considered by both the theories. In both of the
article the factors that lead to control the cost so that the profits, as well as the revenues of the
organization, can be maximized. Along with all these considerations, the theories have also laid
the impact upon the advantages of the standard costing as well as the shortcomings so that the
effectiveness in the organization can be determined if this method is used by the organizations.
The transparency within the organizational structure can be maintained on maximizing the
profits by reducing the cost, it is the point which is focused in both the studies followed by the
organizations. The ways through which the variances that have been occurred by comparing the
actual results with the budgeted one can be removed are also explained in the articles as it will
help in maintaining the accountability as well as the transparency within the organization. The
details are given through the different steps in both the studies so that the organizational goals
can easily be achieved by working on the variances involved and effectiveness can be maintained
(Abdullahj, et. al., 2015).

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There are some of the variations which have been observed in both of the studies that are the first
article speaks about the application of standard costing in the sector of the telecommunication so
that the cost of each product can easily be determined and the improvements in the profit of the
organization can be made. Along with this, it has aimed at finding the relationship between the
standard costing and cost control. Another research also focuses on establishing the provisions
which are related to the information on factors that help in controlling the cost and removing the
products which are not profitable. The main aim of this study has laid on finding the relationship
between the both while the first study did not talk about the factors which helps in controlling the
cost and relied much on emphasizing upon the attainment of profitability. They have obtained
the result from its observations which shows that the more efficient the organization is when it
practices more of the standard costing as it helps in managing the cost of resources within the
organization which in turn also leads to the achievement of the productivity within the
organizational structure (Kludacz-Alessandri, 2016). The results which are achieved from both
the observations show that there are two types of the factors which are compared by studies so
that the benefits received from them can be regulated which were not included in the first article.
It has been found that the management accountants within the organization have to take the
correct and important decision for the organization so that proper policies for the future can be
implemented. It also has been observed that both of the theories have produced the positive
outcomes for the fulfilment of the standard costing methods within the organization but there are
some other dissimilarities which has appeared due to the differences in factors of analysis. The
standard costing aims at making the standard planning by setting the benchmark for all the
employees within the organization as observed into the studies (Akenbor and Agwor, 2015).
D) Outcome learnt from research

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After taking out the research there are various outcomes which will help the management
accountants to manage the resources accordingly have been obtained by the companies and then
decisions are taken related to the future activities and the operations of the business can go in a
smooth and effective manner (Kravet, 2014).
It is also found that the decision making process is also improved through the proper
achievement of standard costing (Abdullahj, et. al., 2015). The description of the standard
costing method information is essential in the organization as it helps the managers of the
organization to take the correct decisions. The outcomes which have been attained by the study
of the telecommunication area shows that the standard costing is used on a large scale in the
telecommunication companies. Along with this it also helps in improving the planning of the
organization by setting the correct benchmarks. It is observed that if the methods, as well as the
principles of the standard costing, are implied to the MTN Company, then there are numerous
chances of advancement for the profitability. It has also been found that the management reports
are aligned and late presented to the high-level authorities or the management so that they can
easily take actions according to the information available in these theories. The overall outcomes
support that the results which are general aids in the advancement of the profits in the
manufacturing companies.
The report which has been generated in the overall theory concludes that there is the proper
relationship between the cost control technique the standard costing (Akenbor and Agwor, 2015).
The various factors through which the connection between the costs controls as well as the
standard costing are taken into consideration in another report. Along with this, it has also been
found that as more and more the organization uses the standard costing the more effective and
efficient the labour, materials and overheads of the organization (Islam and Hu, 2012).

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It is also realized that the standard costing is the best tool through which the cost of the oil and
gas industry will be regulated and the performance of the workers within the organization will be
advanced for further growth and success (Kludacz-Alessandri, 2016). The standard costing
method is recommended for firms of the oil and gas industry to adopt and also apply so that the
efficient use of the resources can be maintained and the cost of the organization can be regulated
in the efficient way (Hilton & Platt, 2013). Along with this, the management should also use the
proper strategic measures for the adoption of the standard costing so that the sustainability of the
firm can be achieved and effectiveness, as well as the assess ability within the organization, can
be marinated.
Therefore, it can be concluded that both the articles provided the different results which will help
the managers as well as the management accountants in making the correct decisions related to
the organization. Along with this, it aims to provide the appropriate manner which will target to
attain the organizational goals as well as the motives of the understanding about the benefits
which is achieved by the organization through the accountants of management. (Ilg, et al., 2016).
For the telecommunication sector, in order to attain profitability, the organization of
telecommunication must summarize that the standard costing method is essential as it will help
in regulating the cost and achieving the success. The strength and weaknesses of the competitors
are also regulated through standard costing as it helps in maintaining and obtaining the business
strategy which in turn will help in achieving the profits within the organizational body (Akenbor
and Agwor, 2015).