Making variance analysis more meaningful, Cost Accounting

Making Variance Analysis More Meaningful

To compose variance analysis as useful aid to management is the main objective of variance calculations.  However this can only be done whether we investigate the variances and the data utilized to calculate them. Typical questions that could be asked involve:

i. Is there any relationship between the vacancies as example: did we report an unfavourable material usage variance since we reported a favourable material price variance like a result of purchasing low quality materials?

ii. Can further information than merely the variance be provided through the management as to what could have resulted in the variance? As an example: did the budget employ an unrealistic overhead absorption rate leading to capacity and efficiency variances?

iii. Is the variance important and worth reporting? Materiality. This is no point concentrating on extremely small variances. Usually the management sets a significance level of variances as an example: variances are only investigated only whether they beyond 20 percent of the expected value. Hence a variance of between 1 percent and 19 percent would not be investigated.

iv. Are the variances being reported quickly sufficient, to the right people, in enough or too much detail, along with explanatory notes and is follow-up done to ensure about correction of the situations leading to variances happening?

Posted Date: 2/7/2013 7:42:54 AM | Location : United States







Related Discussions:- Making variance analysis more meaningful, Assignment Help, Ask Question on Making variance analysis more meaningful, Get Answer, Expert's Help, Making variance analysis more meaningful Discussions

Write discussion on Making variance analysis more meaningful
Your posts are moderated
Related Questions
explain any five qualities of accounting profession

“The statement of cash flows is the easiest of the basic financial statements to prepare because you know the answer before you start. You compare the beginning and ending balances

1) Please elaborate on the attached performance report by preparing a presentation to "management" which incorporates the information presented in the performance report. Present t

Q. Is there barely one way to conduct fca? Ans. No. It is significant for each area to put the FCA process in perception with its waste management goals. Every community w

) Ialani Corp. uses a job order costing system for the yachts it constructs. On September 1, 2010, the company had the following account balance: Raw material inventory 332400 Wo


(a) Calculate the number of US imports with and without the tariff. (b) Calculate the dead weight loss of the tariff. (c) Calculate the loss in consumer surplus resulting fro

from the following particulars calculate the earning of worker . rate per hours $0.50 standard time 200 hours time taken 140 hours

The state legislature has voted to develop a grant-in-aid policy to try and induce local communities to devote more resources to improving their infrastructure. Town O = Has a

(a) Describe briefly how the following are used in the accounting for labour: (i)   time sheets (ii)   job cards. (b) The following details relate to the labour in a produ