Question 2

a) Critically evaluate whether or not Standard Costing procedures can be equally applied

to both service industries and manufacturing companies.

You should support your answer with either examples, articles, case studies or journals to demonstrate similarity or distinctions between the two types of companies when applying standard costing procedures. Calculations can be used to demonstrate answer but should not be the main thrust of the answer. Your answer must include citations demonstrating adequate research.

25 marks

b) The following outcomes were noted for Juniper Ltd using a standard costing and variance

analysis system.

Adverse Favourable

Variances__________________________________________________________________

Material Price 3 500

Material Usage 8 300

Wage Rate 44 000

Labour Efficiency 52 000

Material price variance - adverse

Material usage variance - favourable

Wage rate variance -favourable

Labour efficiency variance- adverse

Juniper operates a standard costing system. Assess the performance of the Production Manager using the figures above and identify and critically evaluate the possible causes of the variances noted above for Juniper Ltd. You can make assumptions on the businesses operations in explaining possible causes.

25 marks, Total 50 marks