Strategic Management Accounting Research Paper Example | Topics and Well Written Essays - 3000 words

Strategic Management Accounting - Research Paper Example Variance analysis helps to determine variation from standards and in turn enhances productivity (Thukkaram, 2007). Any standard setting is a double edged sword, which has its plus points but is not free from certain drawbacks. The paper is an analysis of traditional and modern methods of costing and also, lays down an explanation for each one of these methods, besides recognising the importance of each one in specific industries. The prime objective of the paper is to understand the different methods of costing and analyse and establish the method of costing which is indispensable as per the kind of organizational setting and organizational needs in context. The study was aimed at analysis of various cost measures and their individual suitability to different organizational needs. The scope to fully gauge the benefits of using each one of them was unavailable. Real life case analysis was also not possible for establishment of research findings. Marginal costing can be referred to as a variation of flexible standard costing that helps to distinguish between the fixed costs and variable costs, which depend on per unit of output produced. Marginal costing is helpful in monitoring costs based on resources that drive it. These resources help in segregating costs into fixed and variable elements. Any cost fluctuations observed as a result of operational changes can be accurately predicted and checked with the use of marginal costing. Marginal costing is one method of costing for inventory where all the different variables of manufacturing costs are included as inventory costs. Such costs are incurred and become a part of the cost of goods sold when the product gets sold, while other elements of cost, which is the fixed cost, is taken to be costs for the period within which it is incurred (Kaplan Financial Knowledge Bank, n.d.). Marginal costing tries to capture the behavioural aspects of cost calculation, rather than functional traits of cost. The