Describe the two major theories used for the detection of out-of-control costs.

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15-10-2019
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Describe the two major theories used for the detection of out-of-control costs.

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FABIOROGERBRAINLY FABIOROGERBRAINLY · Answer 1 · 2019-10-15T15:17:28+02:00

Answer: Two main types of standards are established to control costs. External and Internal.

Explanation: External standards are applied for comparing performance with other organisations. The external standards are used for comparing the cost performance with the other firm take the shape of a set of cost ratios. Internal standards, on the other hand, are used for the evaluation of intra firm cost elements like materials, labor, etc.