Identify THREE disadvantages of a standard costing system. (3 marks)
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- Reports and information is prepared after the event on a historical basis.
- Standards used inappropriately, with a focus on negative impacts, can have a demotivational impact.
- Calculation of efficiency variances assume labour is always variable and that normally production is a factor of labour.
- Favourable and adverse variance can be difficult to understand.
- No consideration of qualitative factors. (Any 3 points)