9 – Standard costing
Publisher Summary 
This chapter discusses standard costing. A standard cost is defined as a predetermined calculation of how much costs should be under specified working conditions. The Terminology goes on to explain that a standard cost is built up from an assessment of the value of cost elements and correlates technical specifications and the quantification of materials, labor and other costs to the prices and/or wage rates expected to apply during this period in which the standard cost is expected to be used. The Terminology envisages that such standards would be used as established control tools through variance analysis, inventory valuation and even for fixing prices. Standards can be set for direct materials, both price and usage, for direct labor, and for indirect fixed or variable conversion expenses. Within the context of the operating of standard costing, the difference between the goal set and the results achieved can be quantified, analyzed, and hopefully, unambiguously communicated. At the very outset, the emphasis on analysis is vital because whereas the variance itself directs attention to its existence, it is the skill in analysis that correctly draws attention to the reason.
Behavioral Properties of Variance Controls
The behavioral implications of variance controls have generally been ignored. This paper examines the characteristics of variance controls, traces their use in modern organizations, and suggests further areas for application and improvement.
Statistical Controls in a Police Department
A police department is in the business of control, specifically the control of crime and traffic. In addition to the usual business control problems, as well as those occasioned by its quasi-military type of management, a police department also has the statistical problem of controlling the quality of crime reporting. For this reason, the department must be kept informed about the number and kinds of incidents that occur in various sections of a city so that sufficient numbers of policemen can be deployed where needed.