ABSTRACT
The conventional technique used in controlling the profitability of production situations is standard costing. In practice, standard costs are established for each operation performed on each component produced, building up in total to a standard cost for the final product. Project situations were earlier defined as being those where for a finite input of expenditure, a direct and immediate effect on output or sales would not be expected to occur – that is, most items classified as fixed or semi-variable overheads. The classic technique for dealing with such situations is that of budgetary control. Costs such as plant and building maintenance, rents, rates, power, advertising, will be expressed in finite sums of money, but under each heading it is quite possible that major individual items of expenditure will be specifically identified. Businesses differ as to how managers should be accountable for their expenditure.
