Are standard costing and variance analysis still relevant for cost control?

I use it everyday, so I would have to say yes.Are standard costing and variance analysis still relevant for cost control?
Standard costing and variance analysis is not so relevant for cost control and performance evaluation purposes in today鈥檚 intensive competitive manufacturing environment. The usefulness of standard costing and variances analysis in a modern business environment has been questioned and several writers have predicted its demise because of the impact of changing cost structure. It is claimed that overhead costs have become the dominant factory costs, direct labour costs have cost have diminished in importance and that most of firm鈥檚 costs have become fixed in the short term. Given that standard costing is most suited to the control of direct and variable costs, but not fixed or indirect costs, its usefulness has been questioned. However, recent surveys reported that direct costs and overhead approximately 75% and 25% respectively of total manufacturing costs with average direct labour costs varying from 10 -15% of total manufacturing cost. Clearly the claim by commentators that overheads are the dominant factory costs is not supported by the survey evidence. Direct materials are the dominant costs in most manufacturing organizations and account for, on average 60% of total manufacturing costs. Direct labour costs are now of much less importance and tend to be fixed in the short-term. Direct materials and variable overheads are now only the short-term variable costs. Thus, standard costing variance analysis for control purposes would appear to be only appropriate for direct materials and variable overheads, the latter being a small proportion of total manufacturing costs. However, the reporting of direct labour variances at periodic intervals is probably justified since efficiencies/inefficiencies in resource consumption are high-lighted and provide useful feedback information for re-deploying labour or ensuring that in the longer-term changes in resource consumption are translated into changes in spending on the supply of direct labour resources.Are standard costing and variance analysis still relevant for cost control?
All the companies decide which variable wants to monitor, standard costing and its variance is one of the more popular.


The theory of microeconomics assign some importance to this variable and the change of standard costing is used to explain some phenomena economics.