Some Statistical Properties of Standard Cost Deviations
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journal contribution
posted on 2025-01-15, 01:00authored byJ Booth, RJ Willett
Very little is known about the theoretical statistical properties of accounting numbers. In this paper a probability modelling technique is used to analyse the volume, efficiency, and price deviation—more usually known in the accounting literature as ‘variances’—of standard costing. Standard-cost deviations are defined as differences between certain types of conditional and unconditional expected costs. The basic statistics required to construct theoretical confidence intervals for these differences are identified, and it is shown how the formulae normally used in their calculation may sometimes be correlated. The modelling technique adopted is based on a theory of accounting measurement which interprets accounting numbers as specialized types of statistics. It illustrates the potential of the theory for the development of a better understanding of the statistical properties of accounting numbers.
History
Publication title
I M A Journal of Management Mathematics: (Institute of Mathematics and Its Applications)
Volume
8
Issue
2
Pagination
167-179
ISSN
1471-678X
Department/School
TSBE
Publisher
Oxford University Press
Publication status
Published
Place of publication
United Kingdom
Rights statement
Copyright 1997 Oxford University Press
Socio-economic Objectives
150404 Service industries standards and calibrations