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Unformatted text preview: costs, which will cause management to evaluate the situation. Similarly, assume that poor maintenance caused the onion-dicing blades to become dull. As a result, usage of onions to make a gallon of chili tripled. Because this deviation is quickly highlighted through standard costs, managers can take corrective action promptly. How might management use this raw material cost information? Answer: Management might decide to increase the price of its chili. Or it might revise its recipes to use cheaper ingredients. Or it might eliminate some products until ingredients are available at costs closer to standard. Source: Adapted from David R. Beran, Cost Reduction Through Control Reporting, Management Accounting, April 1982, pp. 2933....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 202 taught by Professor - during the Fall '11 term at Montgomery.
- Fall '11