Important points regarding to the variance analysis, Cost Accounting

Important Points Regarding to the Variance Analysis

Variance reporting concentrates on both with favourable and unfavourable variances. Normally unfavourable variances are punished on the responsible persons whereas favourable variances are rewarded. Conversely, it is a rule of thumb but not usually the case. Keep in mind that an unfavourable variance might arise because of factors beyond the employee's or manager's control, whether in case you can't punish that person:  quite, you have to explain the unfavourable variance in terms of the uncontrollable factor of alternatively adjust the standard to incorporate the changed circumstances. The similar case can be argued for favourable variances.

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