Standard Costing

11 November 2016

When actual overhead rates are used, production volume of each product affects the reported costs of all other products: This reason, which was discussed in the previous chapter on normal costing, represents an advantage of standard costing over actual costing, but does not represent an advantage of standard costing over normal costing. 3. Costing systems that use budgeted data are economical: Accounting systems should satisfy a cost-benefit test: more sophisticated accounting systems are more costly to design, implement and operate.

If the alternative to a standard costing system is an actual costing system that tracks actual costs in a more timely (and more expensive) manner, then management should assess whether the improvement in the quality of the decisions that will be made using that information is worth the additional cost. In many cases, standard costing systems provide highly reliable information, and the additional cost of operating an actual costing system is not warranted. Hotel Industry: A hotel is an establishment that provides lodging paid on a short-term basis.

The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table and a washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms and air conditioning or climate control. Additional common features found in hotel rooms are a telephone, an alarm clock, a television, a safe, a mini-bar with snack foods and drinks, and facilities for making tea and coffee. Luxury features include bathrobes and slippers, a pillow menu, twin-sink vanities, and jacuzzi bathtubs.

Larger hotels may provide additional guest facilities such as a swimming pool, fitness center, business center, childcare, conference facilities and social function services Hotel rooms are usually numbered (or named in some smaller hotels and B&Bs) to allow guests to identify their room. Some hotels offer meals as part of a room and board arrangement. In the United Kingdom, a hotel is required by law to serve food and drinks to all guests within certain stated hours. In Japan, capsule hotels provide a minimized amount of room space and shared facilities.

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