‘’Standard costing and Variance analysis are appropriate to any type and size of organisation’’. Critically evaluate this statement, indicating whether you agree with the statement or not.

You are required to produce a report which answers the following TWO questions:

Part a.

Organisations need to know the cost of products or services they provide for a variety of decision making situations. Critically evaluate the following three approaches to costing products or services.

Marginal or variable costing

Full or Absorption costing

Activity based costing (ABC)

For each approach identify one managerial decision making situation where your preferred approach is more appropriate than the other two and justify why you have chosen that approach over the other two approaches in a particular decision making situation.

Part b.

‘’Standard costing and Variance analysis are appropriate to any type and size of organisation’’. Critically evaluate this statement, indicating whether you agree with the statement or not.