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Parker Brass: Standard Costing Methods
Parker Brass
The Parker Hannifin Corporation is a manufacturing company that specializes in developing products such as tube, fittings, valves and hose. David Johnsen, who is the Cost Accounting Supervisor in the Brass Products Division, describes the success of system used by Parker Brass in the Winter edition of Management Accounting Magazine. He, along with Professor Parves Sopariwala of Grand Valley State University, gives a detailed description of the methods of costing Parker uses and explains why those methods are so successful.
Changing times have stigmatized standard costing as inappropriate in the current business environment, with businesses leaning toward a styles such as the just-in-time method (JIT). ... However, many companies, including Parker Brass, have found ways to make standard costing work effectively.
Standard Costing
Standard costing uses realistic costs for direct labor, direct materials and overhead. ... One reason companies are turning away from standard costing might be because it doesn’t allow for any of a number of variables. There are two types of standard costing: ideal and currently attainable. ... Currently attainable standards is more flexible and does take into consideration issues such as interruptions, but traditionally does not consider several other variables, such as material substitutions, that Parker Brass has had to find solutions for (Hansen, p.
Approximate Word count = 1016
Approximate Pages = 4.1
(250 words per page double spaced)
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