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.
There are many ideas that come to the mind and many questions that keep coming
to the mind when it comes to analyzing the phenomenon of using the methods and tools to
help in the planning and making appropriate decisions.
In this research we tried
to display the importance of statistics and the most important
methods depending on the number of variables used in this analysis: descriptive
statistical indicators in case we had one variable, indexes in case we had two variables,
and factor analysis and analysis of variance in case we had several variables. These methods
were applied to production of irrigated wheat crop, both types soft and hard, during
the period 2000 - 2010 and the factors affecting its production, such as: the cultivated area,
yield, fertilizers, water, the average cost and the average price. Then the data were analyzed
using the Statistical package SPSS and program Excel. After that, they summarized
in two main factors that justify together (86.116%) of the overall variance. The first factor
was related to the land and everything related to it through a set of variables, which are:
the cultivated area and the need to fertilizers and water., The second factor was the importance
of the selling price of the crop per kilogram.
