Chapter 21, Problem 13DQ

To determine

Standard Cost:

The cost which is estimated by the management, this cost includes the cost of process and resources used at the time of manufacturing. This cost is ultimately compared with the actual cost incurred.

Flexible Budget Performance Report:

This budget uses various formulas to equalize various fluctuations in the actual revenue of the company and various other activities.

Variance:

The difference between the estimated cost or revenue and the cost or revenue which actually incurred or obtained, gives the value of variance.

To identify: Relations among standard costs, flexible budgets, variance analysis and management by exception.