BUS 254 Chapter Notes - Chapter 9: European Cooperation In Science And Technology, Controllability

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Masood Kamlani

Document Summary

Chapter 9 readings: managing costs (page 363) Any control system has 3 basic parts: a predetermined or standard performance level, a measure of actual performance, and a comparison between standard and actual performance. Standard cost: a budget for the production of one unit if product or service. Cost variance: difference between the actual and standard cost. Management by exception: following up on only significant cost variances: setting standards (page 364) The emphasis shifts from what the product did cost in the past to what it should cost in the future. Perfection standard: one that can be attained only under nearly perfect operating conditions. Assume peak efficiency, the lowest possible input prices, the best quality materials obtainable, and no disruptions in production due to such causes as machine breakdowns or power failures. Practical standards: standards that are tight as practical, but still expected to be attained. Assume a production process that is as efficient as practical under normal operating conditions.