Abstract The article talks about a proposal for determining the significance of variations from standard. A primary function of cost accounting is to furnish information which can be used as a basis for action by appropriate supervisory personnel in controlling costs. Many managers, consistent with their intimate knowledge of operations, undoubtedly have developed rough gauges by which they measure performance; however, this "judgmental factor" is often not supported by objective evidence. Therefore, what may be an outside limit in the mind of the manager may or may not be justified by the historical facts. The potential uses of statistics in the area of cost control is gaining recognition. It may be that quality control techniques can be drawn upon in reaching a satisfactory solution to the problem under consideration here. The use of statistics will make possible a mathematical and orderly evaluation of the historical data; moreover, statistical quality control permits the division of the total variation of quality characteristics into chance and assignable variation. Cost accounting should be expanded to include interpreting the significance of variations. It may be helpful if objective methods can be developed which will facilitate the selection of those variations which should be explained.