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In every organization, the major concern for the managers is in relation to the maintenance and control of the variances and setting of high-performance standards to be achieved by the employees. Nonetheless, this is at the outlay of ethical issues that relate to the end…
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Management Effects of Variances Control or High-Performance Standards on the Ethical Issues of Product Quality Introduction
In every organization, the major concern for the managers is in relation to the maintenance and control of the variances and setting of high-performance standards to be achieved by the employees. Nonetheless, this is at the outlay of ethical issues that relate to the end products or services quality. As a result, managers of such organizations are subjected to stressful situations by the stakeholders and other market players to ensure that they achieve the control variances such as cost variance and set high-performance standards without compromising the quality of the products or services (Kaynak, 2003). This paper seeks to pinpoint how the practices of variance control and setting of high-performance standards may result in ethical issues given that both have served as sources of accounting information and tools for management control systems.
Fluctuations in variances such as cost, production and price need to be controlled since these have a direct effect on the product or service quality attained. Cost control entails the identification of the standard cost of output attained (Malmi & Brown, 2008). Ethical issues arise when cost control is not achieved through the comparison of the total standard cost with total actual cost; hence, needs to be traced to the responsible managers and tasked for the outcome of the failed cost controls. Whenever there are huge deviations between the costs aspects, quality of products or services offered will be affected since the management may tend to vary the prices charged too (Kaynak, 2003).
Maintenance of high-performance standards may result in ethical issues in that it would result in the production of high-quality goods and services. However, this may be at a high cost, which in return may result in raising of prices that may subject the management to ethical wars by quality control bodies and consumer confederations. In the process, managers will be required to provide accurate representations of the production and quality processes. This will be in consideration of the application of variances as accounting information for the management control tool (Malmi & Brown, 2008).
References
Kaynak, H. (2003). The relationship between total quality management practices and their effects on firm performance. Journal of operations management, 21(4), 405-435.
Malmi, T., & Brown, D. A. (2008). Management control systems as a package—Opportunities, challenges and research directions. Management accounting research, 19(4), 287-300. Read More
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