Modern management Techniques

What are they?
They must shape the traditional standard costing/variance analysis to make it more relevant, revise traditional variance analysis to take into account the modern management techniques
Just in time
Materials required on a strictly only as needed basis low or no material level so measuring infantry values at standard costs less relevant requires high standards TQM in all operations. So need to report quality variances otherwise not reported by traditional various analysis
Advanced manufacturing technologies
Modern factory is highly automated e.g. use of CAD CAM
it reduces most of the direct labour component and removes most of the direct labour cost variances
Automation results in high overheads so must focus on variance analysis of overheads
Quality play central role in modern business; adhearing to preset standard may compromise quality
Also need to report quality variances
Most overhead costs vary with activities
overhead costs of products and services determined by analysis of activities and cost drivers
so need activity based o/h analysis
Target costing
Target cost= market price-required profit margin
Product designed and delivered at target cost
So target cost/prices must be set of standards
Product life-cycle costing
And multiperiod model reporting costs and evaluating performance on the basis of whole product life experience
Traditional parents analysis is single-parent model focuses on what happens in discrete confined periods inside that life
Need to recognise PLCC with traditional variance analysis
‘Establishment through data gathering of targets and comparators through whose use and relative levels of performance can be identified. by adoption of identified best practice as it is hoped that performance will improve’ CIMA
Types of benchmarking
INTERNAL: other dept’s in same company
FUNCTIONAL: same function in dif. companies of same group of companies
COMPETITIVE: most successful companies
COLLABORATIVE : similar companies provide data to 3rd party, 3rd party provides back avg. data for individual companies to benchmark against

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