Question

For a telecommunication company ( Jio telecommunication company as example)

Speculate how benchmarks can be determined when evaluating variances from standard costs. Provide detailed examples and how you arrived at those examples.

Answer 1

Answer:

Firstly, the definition

Benchmarking refers to collection of the data of all the set targets and relatives data. For a company like JIO telecommunications with the help of a benchmark the firm can evaluate:

• Its current position,
• The base could be provided by benchmarking for setting up standards.
• key areas are focused and set targets that are difficult but achievable.
• It mainly depends on the most correct information from both within the organization and outside the organization.

Benchmarking could be determined while the evaluation of standards as in benchmarking involves the following steps to perform

• Selecting a product/ Service  from inside the organization to benchmark
• Next is to select a comparative company whose product /service
• Collecting all the requisite information in relation to it such as measurements , type, features, etc.
• Now compare the differences between both the product , identify deviation.
• Formulate policies and implement the policies which can increase the performance.

As in standard cost also the comparison is done between the standard product and the actual product . Here the benchmark could be set on this standard product from which the comparison is done. The reason for variance could be analyzed and better policies must be adopted to improve

Example:-

• Step1: If reliance working as a service provider its competition will be the other service provider in the market. So to identify the comparables is the first step in benchmarking.
• Step2: Gathering information about the other company's product such as its speed, latency, price , cost, etc is the second step of benchmarking.
• Step 3:Now compare all the metrics of other company with the JIO
• Step 4: Identify the key areas of difference, for example, the speed and latency of JIO are inferior in comparison with other company.
• Step 5: Formulate policies to improve in the area of speed, latency and reduction in price.
• Step 6: Now this fill set as one of the standard variance measurement parameters
• Step7: Now compare the actual cost with this standard cost.

Conclusion:

The aforesaid example is way in which the speculation of the benchmark can help in evaluating the variance from standard cost.