Question

Standard cost systems can enhance operational control through the use of
a. efficiency variances which indicate the need for corrective action.
b. price variances which indicate the need for better spending control.
c. standard costs which indicate the desired cost of a unit of input.
d. actual costs which indicate the price received for units sold.
e. All of these choices are correct.

Answer 1

Answer:

a. efficiency variances which indicate the need for corrective action.

Explanation:

Operational control basically relates to the operations of the business, price variance describes the rate at which material is acquired, it has no direct relation with operational control as relates to purchase of equipment.

Further, when talking about the efficiency variance it relates to production hours used in relation to standard hours, which help in maintaining operational control.

Therefore, correct option is:

a. efficiency variances which indicate the need for corrective action.