The criticisms connected with the traditional approach for variance analysis of conversion cost focused on using variance of volume for measuring exploitation of productive capacity, and negligence of increasing in the production, also using working
hours, and the time of machines working as a basis for counting carrying rates of conversion costs, and counting the variance.
When variance analysis was not restricted in determined group of changes, and the changes which are used in the analysis can change according to what develops and appears of situations and needs, so variance analysis in its present form does not provide suitable information about the competitive attitude of economic unit from costing side.
Therefore, it is necessary to improve and modify the traditional method of variance analysis of conversion cost under needs and strategies of modern industrial systems, to fit the variance analysis in a way that treats the criticisms which were directed to this style, the role of standard costs system in support of control systems and performance correction, and achievement the strategy of continuous improvement.
The research tries to study the criticisms which were directed to the traditional method of variance analysis of conversion cost, then to apply the modern method of variance analysis of conversion cost, and which suits with requirements of modern industrial environment, in company of Banias Refinery, and the researcher reaches to series of results, the most important of those are:
The changes which happened in modern industrial environment affected the traditional analysis of variance of conversion cost;
The traditional analysis of variance of conversion cost doesn't encourage the continuous improvement;
The traditional analysis of variance of conversion cost doesn't refer to movements of stock in its different types; and
The total variance of conversion cost in company of Banias Refinery is
(-399845730) , that is actual conversion cost bigger than standard conversion cost to the actual production.
The variances analysis of direct materials cost in its current image doesn't provide suitable information about the competitive attitude of
economic units from costing side, and doesn't encourage to continuous improvement, and doesn't suitable or su
fficient to modern industrial environment. therefore it should development the traditional analysis tovariances of direct materials cost, paying attention to needs and strategies of modern industrial systems for treatment the criticisms that are directed to this style and improves from role of standard costing system in support of control systems and performance evaluation, and achievement the strategy of continuous improvement.
Where of past, the researcher prepared suggested framework for development of variances analysis of direct materials cost, which suits
with requirements of modern industrial environment, and its application on company of Banias refinery. and the research reaches to series of results, the most important of those are:
The changes which are happened in modern industrial environment didn't led to collapse and disappearance role of standard costing system, and waiving from one of its ways, it is analysis of cost variances.
The traditional analysis to variances of direct materials cost doesn't refer to movements of stock, and doesn't refer to efficiency of the
buying, production and selling processes.
A production process includes several sub-processes (working areas) that are responsible for performing the different tasks required to accomplish the mission of the process. Thus, it is important to avoid a shortage of resources, unplanned stoppages
and idle times that may arise. The problem addressed in this paper is: How should maintenance be considered in conjunction with plant activities, such as production, quality and personnel competence for easily and effectively identifying and quantifying
company losses in profitability and eliminating underlying causes? In this paper, the interactions between major working areas have been introduced and discussed. The major result achieved in this study is the development of a new model (Maintenance Function Deployment (MFD), for an easy and effective identification and quantification of company losses in profitability. Four matrixe have been used for developing MFD model for effectively integrating maintenance with production, competence and quality. An application example is conducted to demonstrate the possibility of applying the model and its potential for enhancing production processes profitably. The main conclusion is: applying MFD gives an enormous opportunity to continuously maintain the quality of the working areas under consideration, which makes MFD one of the company s objective driven tools for enhancing its profitability and competitiveness.
Cost standards represent the main part of the building process of any complete
standard cost system. Given this, the cost calibration process attracts special attention in
the domains of planning, control, and decision making. The criticisms direct
ed to standard
costing systems in the traditional environment do not mean that these systems must be
abandoned in the modern industrial environment, but they must be developed to reflect the
competitive and technological changes, making them more competent and effective. That
is, the past and present determination for what it must achieve, and what it must be, then
for performance continuation and measuring what has been achieved, and comparing it
with what was set, and determining variances and their reasons, can't reduce its importance
and role in increasing the effectiveness of control and evaluation of performance. The
researcher discusses how to develop cost standards in the light of modern environmental
changes represented in international competition and the technology of modern industry.
To achieve the objective of this research, the researcher studies the following points:
• Determining aims that these cost standards must serve in the environment of
modern industry.
• Studying the proposed characteristics that these cost standards must acquire in the
light of the modern industrial environment.
• Steps of standard preparation in the light of the modern industrial environment.
