The PRIMARY reason for using cost variances is:
A)that they diagnose the cause of a problem and what should be done to correct it.
B)for superiors to communicate expectations to lower level employees.
C)to administer appropriate disciplinary action.
D)for financial control of operating activities.

Question

Quizplus · Accepted Answer

Cost variances are used primarily for financial control of operating activities. They provide insights into the difference between the actual cost and the budgeted cost, thus helping managers identify areas where cost reduction measures can be implemented. Cost variances are not used for disciplinary action or to communicate expectations to employees.

The PRIMARY Reason for Using Cost Variances Is