Standard costing systems are helpful to managers as they provide
Standard costing systems are helpful to managers, as they provide signals of poor quality or exceptional performance. Using standard costs on a management-by-exception basis can help managers to pinpoint areas that they need to pay particular attention to in the following periods, either in an attempt to improve performance or to better understand what is going well in that area that might be transferable to other areas in the organization. Even so, standard costing systems also facilitate other less positive outcomes, such as assigning blame and failing to work to improve efficiency beyond that dictated by the standard.
Required:
Discuss these and other potential negative consequences, as well as what can be done to overcome them when designing and utilizing standard costing systems.
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