Standard Costing Assignment | Top Universities
A CASE STUDY: DUBAI
In light of conflicting views in academic research, we examine how standard costing and variance analysis
are used in one of the world’s fastest-growing economies: Dubai, one of the seven emirates, or states,
in the United Arab Emirates. A number of events make our case study appealing, including the steps the Dubai
government has taken to free up prices and wages, rationalize indirect taxes, deregulate the financial system, promote foreign direct investment, and encourage all companies to use new information and communication technology. To our knowledge, this study is the first of its kind to shed light on the level of use of standard costing tools in Dubai. Our study differs from the earlier study by Sulaiman, et al., in that, while they split their sample on the basis of ownership (Japanese vs. local), we disaggregated the companies by sectors: industrial vs. service. We did this for two reasons. The first is contextual: By law, foreigners in Dubai cannot own 50% or more of a company
unless that company is located in the free zones.
8 Thus it is just not possible to differentiate between nonlocal and local companies in Dubai. Second, by studying the service sector separately, we capture its importance in terms of its contribution to Dubai’s gross domestic
product (GDP). The reason also relates to the fact that the service sector has been studied less than the industrial sector when it comes to the use of standard costing. A plausible explanation for this might be the perception
that standard costing is not appropriate for the service sector and the claim that service companies distance themselves from it. Therefore, we address the following
a. Is standard costing used in Dubai?
b. How important are various functions in standard
c. How frequently are various techniques and cost
standards used in standard costing?
d. How important is the analysis of variance for control purposes?
COLLECTING THE DATA
We collected the data presented here through a survey the questionnaire, and we had a reasonably good response
rate. We chose the companies randomly, covering all subcomponents of the industrial sector and the service and trading (retail) sector, which together constitute the “private sector” in Dubai.9 To design our questionnaire, we modified those of Colin Drury, Chris Guilding, and Sulaiman to allow us to compare our study findings with those that looked at U.K. and Malaysian companies.10 We created the questionnaire, which consists of demographics, characteristics of cost accounting tools, and standard costing practices in Dubai, to answer the following questions:
1. Do accounting and finance professionals in Dubai
use standard costing or some other method to make
2. Which techniques are used in standard costing in
relation to standards based on design/engineering
studies, observations based on trial runs, work/study
techniques, or average historic usage?
3. How are various types of costing standards practiced
by Dubai companies with respect to maximum efficiency standards that are achievable but difficult to. Get Accounting Homework Help Today.