A major information source within many businesses is a system of standard costing and variance analysis.

Required:
(a) Describe briefly four purposes of a system of standard costing.
(b) Explain three different levels of performance that may be incorporated into a system of standard costing and comment on how these may relate to the purposes set out in (a) above.
(c) Comment on whether standard costing applies in both manufacturing and service businesses and how it may be affected by modern initiatives of continuous performance improvement and cost reduction.
(d) A standard costing system enables variances for direct costs, variable and fixed overheads to be extracted. Identify and briefly discuss some of the complexities and practical problems in calculation which may limit the usefulness of those variances.