Very little is known about the theoretical statistical properties of accounting numbers. In this paper a probability modelling technique is used to analyse the volume, efficiency, and price deviation—more usually known in the accounting literature as ‘variances’—of standard costing. Standard-cost deviations are defined as differences between certain types of conditional and unconditional expected costs. The basic statistics required to construct theoretical confidence intervals for these differences are identified, and it is shown how the formulae normally used in their calculation may sometimes be correlated. The modelling technique adopted is based on a theory of accounting measurement which interprets accounting numbers as specialized types of statistics. It illustrates the potential of the theory for the development of a better understanding of the statistical properties of accounting numbers.

Item Type:	Refereed Article
Research Division:	Commerce, Management, Tourism and Services
Research Group:	Accounting, auditing and accountability
Research Field:	Management accounting
Objective Division:	Economic Framework
Objective Group:	Measurement standards and calibration services
Objective Field:	Service industries standards and calibrations
UTAS Author:	Willett, RJ (Professor Roger Willett)
ID Code:	100542
Year Published:	1997
Deposited By:	TSBE
Deposited On:	2015-05-19
Last Modified:	2015-06-09
Downloads:	0