question 1

Swanlinbar Ltd produces plastic crates used in the chemicals industry. The company operates a standard costing system. Over the past number of years there has been considerable volatility in the price and availability of its raw material and in the market for its products. Managers at the company have expressed their dissatisfaction that their performance is being assessed using standards over which they have no control. They have suggested that the use of Planning and operational Variances could help to give a better assessment of performance. One manager has stated \" Under responsibility accounting, the use of detailed Planning and Operational variances enables us to provide clear explanations for deviation from budgets.\" You are required to: Discuss the implications of Swanlinbar Ltd introducing a more detailed standard costing system that includes the use of Planning 8'. Operational Variances