ECONOMICS

Detailed explanation-1: -A variable cost system is an accounting system where standards are set for each manufacturing cost element. One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs. Standards are designed to evaluate price and quantity variances separately.

Detailed explanation-2: -In accounting, a standard costing system is a tool for planning budgets, managing and controlling costs, and evaluating cost management performance. A standard costing system involves estimating the required costs of a production process.

Detailed explanation-3: -Standard cost systems make use of standard costs, which are the budgeted or estimated costs deemed to be necessary to manufacture a single unit of product or perform a single service. Standards are traditionally established for each component (material, labor, and overhead) of product cost.

Detailed explanation-4: -Answer and Explanation: Option (D) is the correct answer. Standard cost is used as the tool for measuring efficiency for controlling the cost of production. Standard cost is part of the cost accounting process.

Detailed explanation-5: -A standard cost system is an accounting system that uses standards for product costs-direct materials, direct labor, and manufacturing overhead. (A standard is a price, cost, or quantity that is expected under normal conditions.) The general formulas for determining cost and efficiency variances.