Bhatia Motor Works (BMW) is one of the renowned coach builders (fabricator) in North India, with a mission to design and fabricate high-quality buses that are innovative in style and engineering; whilst maintaining standards of reliability. BMW has market both locally and internationally. Human resource at BMW is highly skilled and well versed with latest tools and techniques of respective functional area. BMW is innovative company and always try to improve its performance. Till date standard costing at BMW is limited only up to calculation of variance. Analysis and classification of variances are never performed. But newly appointed cost controller is highly motivated. Recently, post his appointment, the budgetary system at BMW was revamped drastically as part of cost efficiency drive. Same was done to give best response to variance identified, if any. Not only this, but cost controller is also interest in incorporation of relevant costing and learning curve in standard costing and budgetary control system. With help of management accountant, he able to fetch following data, pertaining to different divisions Fabrication division of BMW manufactures two products seat handle (product code B-SH101) and seat cover (B-SC-102) with BMW logo imprint on both apart from fabrication. Product B-SH-101 takes 6 men hours to make while product B-SC-102 takes 12 hours. In a month of 25 actual working days of 8 hours each, 1,200 units of B-SH-101 and 750 units of B-SC-102 were produced. BMW employs 75 men in the department responsible for producing these two products. The budgeted hours are 1,86,000 per annum. No. of budgeted working days were 26 but due to break-down, production function actually remains in operation for 25 days only.Painting Division The budget was prepared by management accountant for painting division based upon performance report of last year, he assumes that workers learning curve rate will be 95%. But workers are skilled and specification of task is well known to them, so they assure their manager of 90% learning curve rate (learning index value will be -0.152). Since BMW believe in participatory budgeting, hence management accountant revised the budget estimate post feedback from workers group. In each month 15 buses are made ready for delivery after painting & fabrication. It is estimated that initial bus will take 20 hours for painting. It is estimated that learning will be terminated post 6th unit. Extracts and Values from tables Log 2 = 0.3010, Log 3 = 0.4771, Log 5 = 0.6990; Antilog of 1.1827 is 15.23, Antilog of 1.2808 is 19.08 and Antilog of 1.1948 is 15.66. Required (i) Is favourable variance being conclusive proof of efficiency, or investigation of variances is essential? ILLUSTRATE. (ii) EXPLAIN planning and operating variance. (iii) Standard cost used for variance analysis is not always relevant cost. EXPLAIN the importance of relevant cost while determine standard cost for variance analysis. (iv) Largely the standard yardsticks are static in nature, during a particular period for ease of variance analysis for said period; but not in case of labour related standard yardsticks; due to learning curve ASSESS the validity of the statement, in light of need of recognition of learning curve, while establishing the standards. (v) COMPUTE revised budgeted labour hours for management accountant incorporating learning curve. (vi) EXPLAIN and INTERPRET control ratios.