Folsom Custom Skis, 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 Managements goal is not to minimize variances.
Required:
Write a short memo to Mike McCabe, Folsom Custom Skis President, (no more than 1 page) interpreting these two comments in the context of his business.