Running head: ANNOTATED BIBLIOGRAPHY 1

Annotated bibliography Case 19.1 Bennett Body Company

Name

Institution
ANNOTATED BIBLIOGRAPHY 2

Annotated bibliography Case 19.1 Bennett Body Company

Drury, C. (1992). Standard costing. London: Published in association with the

Chartered Institute of Management Accountants [by] Academic Press.

Standard Cost System

Standard cost is a system used for planning, managing and controlling cost together with

an evaluation of cost management strategies. It is generally used to roughly estimate the costs

that are incurred in the production process. In this book, the author states that the primary

importance of standard costing is evaluating the performance of an organization using

variances. He, however, indicates that it is difficult to use standard costing in companies that

do not have recurrent purchases as this may make recording difficult. He further argues that

the major challenge with accounting data is the provision of old cost entries while the current

systems use overhead allocations rather than tracing directly.

Dopuch, N., Birnberg, J., & Demski, J. (1967). An Extension of Standard Cost Variance

Analysis. The Accounting Review, 42(3), 526-536. Retrieved from

http://www.jstor.org/stable/243717

Cost Variance

Cost variances are the difference between the estimated cost and the actual cost of

goods and services. Cost variance could be as a result of a change in market prices or labor

rates. It can also result in a product of saving or wasting materials during the production

process or the range in production volumes. Some factors that could affect the efficiency

variance include minimum standard wages in the company. It explains that when the workers

don’t hit their targets due to unsatisfactory wages, this could lead to a decrease in production,

in turn, increasing variance. On the other hands, fluctuation in prices of products that cannot

be controlled by the company such as diesel may increase or decrease the estimated cost of
ANNOTATED BIBLIOGRAPHY 3

purchases. It is because if diesel is a factor during the production process, then it will increase

the overall production of the goods.

Seiler, R., Louderback, J., & Hirsch, M. (1982). The Accounting Review, 57(4), 839-840.

Retrieved from http://www.jstor.org/stable/247433

Cost Accumulation

Cost accumulation is generally a record for all the costs and transactions involved in

the production of goods. There are however two main methods of cost accumulation one of

which job order system collects direct information about staff, materials and any other

necessary raw materials while the other one is where general costs are kept and maintained

under one center. The company in its working year already sets aside the expected overhead

for the year because there may be changes in prices of purchase products. A company may,

however, choose to work with averages in terms of costs and units over some time. However,

standard overhead rates can be assigned to individual models, and this could eliminate

fluctuations in above rates.

Liao, S. (1993). The Accounting Review, 68(2), 426-427. Retrieved from

http://www.jstor.org/stable/248416

Overhead Cost Allocation

The rate of allocation charged per unit for production of goods is referred to as

overhead allocation. Usually, the rate is generated from the amount of time a worker or

machine spent in the production of a product. The article dwells on the implications of

overhead cost allocation and conclusively states that it is important to determine an overhead

allocation in order to decide how to price the output.