Keys, David E.
B.S. (Bachelor of Science)
Department of Accountancy
Standard costing systems are no longer adequate or effective costing systems for U.S. companies employing statistical process control, total quality control, and just-in-time inventory systems. The four purposes for which standard costing systems are used have been identified by Charles T. Horngren as follows: 1. Financial statement preparation . 2. Cost management 3. Price-making and price policy 4. Budgetary planning and control The purpose of this thesis is to demonstrate the inadequacies of standard costing systems for use in the above purposes. Although several alternatives to standard costing systems are proposed, it is beyond the scope of this paper to deliniate methods for implementing these alternatives. Supporting research was performed in the Northern Illinois University library. References cited include periodicals, textbooks, and a study by the Institute of Management Accountants. Past articles have questioned the effectiveness of traditional standard costing, however, no works were found which challenged the use of standard costing systems for the four purposes named earlier nor which proposed alternatives to standard costs. The proposal that standard costing systems are no longer sufficient to support today's manufacturing environment is a fairly new idea. However, research has led to the conclusion that the era of standard costs is coming to an end.
Wagner, Kristin L., "The Death of Standard Costing" (1992). Honors Capstones. 1130.
Northern Illinois University
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