Question

Niner Bikes, as discussed in the chapter opener, uses a costing system with standard costs for direct materials, direct labor, and overhead costs. Two comments frequently are mentioned in relation to standard costing and variance analysis: “Variances are not explanations” and “Management’s goal is not to minimize variances.”
Required
Write a short memo to Chris Sugai, Niner Bikes’ president, (no more than one page) interpreting these two comments in the context of his business.


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  • CreatedApril 23, 2015
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