As technology revolutionizes the manufacturing operations, what are some of

As technology revolutionizes the manufacturing operations, what are some of the adjustments needed to be made (if any) to standard-costing system to remain as an effective measure in today’s business environment? (300 words)

Also, need two replies 200 words each……..


The adjustments that a standard cost needs to develop to remain affective in the business environment

Most of the companies are operational in a similar manner. In fact there is bound to be an exception and a standard when it comes to the question of production. An example is if a company is producing tables they are going to formulate a component for each of them. With the help of these standards it is possible to arrive at the standard costs that help in the formation of an assortment when it comes to the numerous project types.

Once any type of variance occurs, there is an effort at the level of a company to outline the reasons for the same.  A prominent example is General motors has a standard in place for each of their item. This helps in arriving at the cost along with the sale price of the power antenna. Hence the company goes on to be adding when it comes to the standard items of all the vehicles as it clearly outlines too much or less labour was part of the production process. In spite of the benefits of standard costing there are bound to emerge numerous drawbacks of such a system (Iliemena & Amedu, 2019).

There has to be a standard at the starting phase to be preparing a cost for the budget. With a standard cost it is the cost that a company goes on to establish at the starting phase of the fiscal year. It is possible to determine such costs once you tap on the historical inputs or the norms present in the industry. Then it is possible to compare them with the actual results so as to achieve a proper level of efficiency. In certain cases when you go on to compare the standard cost against the actual results might turn out to be different.


Iliemena, R. O., & Amedu, J. M. A. (2019). Effect of standard costing on profitability of manufacturing companies: study of Edo State Nigeria. Journal of Resources Development and Management53(3), 28-34.

Reply 2:

The standard-cost calculation method is an economic measure for measuring the cost to produce specified goods and services. Therefore, it is based on a wide range of inputs that can potentially vary over time or be fixed from one to another. These inputs include the cost of capital, inventory and inventory value; time to final assembly; production costs, time to service, and overhead costs, among others. If the standard-cost calculation methodology is used to measure the standard cost of goods and services (SCC) and then to compare it with the cost of production of these goods or services (SCP), then the cost of production is the difference between the cost of production and the standard cost of goods and services. In most cases, the standard cost of production is the difference between the cost of production and the SCC (because of the wide range of inputs for these outputs). If the standard cost is based on the average cost for all inputs, the SCC is the cost of production divided by the sum of the cost of production and the cost of service (Zimmerman, 2017).

One issue with standard-costing systems is that the amount of capital required to get a manufacturer to produce at its standard-costs requires much capital. Therefore, many manufacturers have stopped making standard-costing systems and have chosen other processes. In this new business climate, our cost calculation will probably be very similar to the one we used prior to the transition to a new cost-based system, so people will not be changing the systems based on the old price. It is also important to note that manufacturers who have switched to standard-costing systems may not be satisfied with the same performance they have seen from a prior system. The manufacturing process and process optimization are based on many factors. Standard-costing is one of the most widely used models of cost calculation that is currently used in practice around the world to measure the performance of firms to increase their earnings (Zimmerman, 2017).

A Standard-costing system is based on the assumption that to bring a given system to market, and one needs a minimum price set so that manufacturing cost could be fully justified. This system has been accepted as the gold standard for many years. However, as in the past, it should also be kept in mind that when it comes to cost for some other industry, it might seem like people are paying the market for a particular industry, but the actual system is entirely dependent on it (Zimmerman, 2017). Because of this, in general, one does not have access to the final cost. On the other hand, if people were developing a new product, one could compare the final cost based on the specifications that have been set in the design process for the new product and compare that to the minimum price set. This approach allows people to get an idea of how to reduce costs in such a situation (Zimmerman, 2017).


Zimmerman, J. L. (2017). Accounting for decision making and control (9th ed.). New York, NY: McGraw-Hill Education.