Forums › ACCA Forums › ACCA APM Advanced Performance Management Forums › TQM and variance analysis
- This topic has 1 reply, 2 voices, and was last updated 7 years ago by sa1pw.
- AuthorPosts
- May 8, 2017 at 9:21 am #385317
Introducing TQM will reduce the importance of variance analysis in a manufacturing organisation. Is this statement right? By using TQM, will it make the variance analysis from a standard costing system redundant? I would appreciate if someone could clarify this for me.
May 21, 2017 at 12:00 pm #387236TQM is based with Kaizen Costing which emphasizes on gradual and continuous improvements. With traditional standard costing you set up a standard in advance and evaluate against it.
However with TQM and Kaizen approach you don’t have a pre set standard, Once you’ve incurred a year’s cost/input you basically look forward to improve gradually there on.
Like in Standard Costing you may set a pre set standard of 2000kg Material, However With TQM and Kaizan Approach you take up production without a set standard and let’s say you’ve incurred 2200kg, You’ll look forward to reduce 5%-10% target of that gradually each year as you build upon systems, culture and approach for cost reduction.
- AuthorPosts
- You must be logged in to reply to this topic.