Problem:
Standard costing and variance analysis techniques are most often associated with manufacturing businesses. You have been contracted by the owner of a small advertising agency to evaluate the use of standard costing techniques for the services provided by his firm.
Discuss whether you believe standard costing techniques can be applied to this service-based business. In your discussion, highlight the pros and cons of using such a system to track costs for an advertising business. Make a recommendation to the business owner, supported by factual information.