A Normative Model for Investigation Decisions Involving Multiorigin Cost Variances.

The article discusses the technique of controlling costs by cost variance analysis. The goal of this research is to develop a distribution of cost variance that is noncontrollable and then use this distribution to look at expected earnings. A standard cost accounting system is presented as are calculations that can be used to determine standard and actual cost. The article concludes that cost variance is insufficient for deciding whether or not to investigate cost variance. It is suggested that cost variance should be divided into controllable and noncontrollable groups to be used to create a probability distribution.