Journal Article

The statistical analysis of standard-cost deviations


in IMA Journal of Management Mathematics

Published on behalf of Institute of Mathematics and its Applications

Volume 8, issue 2, pages 167-179
Published in print March 1997 | ISSN: 1471-678X
Published online March 1997 | e-ISSN: 1471-6798 | DOI:
The statistical analysis of standard-cost deviations

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Very little is known about the theoretical statistical properties of accounting numbers. In this papera 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 asdifferences 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.

Journal Article.  0 words. 

Subjects: Mathematics

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