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You are an assistant to the Management Accountant and Management Accountant has asked you to explain a briefing note and slides to be presented in the Budget Meeting of RC Company. Management Accountant has stated that:
"A standard cost is a carefully determined cost used as a benchmark for judging performance. The purposes of a standard cost are to exclude past inefficiencies and to take into account changes expected to occur in the budget period."
Required:
You must work on these points:
Question 1: Why should a company calculate price and efficiency variance?
Question 2: How do managers use variances?
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