A. Participative management lies in the area of communications and does not relate to standard costs.
B. MBO can be used in conjunction with a standard costing system, but they are not necessarily related. The primary focus of MBO is goal congruence; it is a behavioral, communication-oriented, responsibility approach system.
C. The target (hurdle) rate of return is a capital budgeting function. It is not concerned with standard costs.
D. A standard cost is an estimate of the cost the company expects to incur in the production process. Without a standard cost, the analysis of actual activities and results is very difficult because there is no standard to measure the performance against. Standard costs are best used with a flexible budgeting system in order to provide the most useful variance analysis.
