Chapter 23, Problem 5BTN

To determine

Concept Introduction:

Standard Costing System:

Standard Costing system allows estimating the costs, preparing budgets for future periods, and analyzing the performance by comparing the budgets with actual results and find variances.

Variance:

The term variance is used under standard costing system. Variance is actually the difference between the standard amount and actual amount. The variance can be calculated for costs and revenues.

To Discuss:

The meaning of the comments on the variances analysis "Variances are not explanations", "management is goal is not to minimize the variances".