Variance analysis, Cost Accounting

Variance Analysis

This section describes how labour, material and overhead variances are calculated and what causes every of those variances. A chart is given also to describe how the variances add up to translate to a profit variance.

Insightful Note

In a typical organization, the planning process starts along with a budget followed with actual performance. The budget will generally be based on standard costs of the needed output units.  Although how does a budget real performance relate?

1. Budgets are followed with performance

2. Performance leads to preparation of a performance report that compares the budgeted performance and the real performance, and consequently determines whether is a favourable (F) or whether unfavourable (U) variance.  These variances are exceptions; hence the performance report variance report is an exceptions report.

3. Variance signals those areas such require managerial attention and these are common areas along with problems. These variances lead to investigation in those problems areas and the suitable corrective action is recommended, determined and later on implemented.

Posted Date: 2/7/2013 6:02:27 AM | Location : United States







Related Discussions:- Variance analysis, Assignment Help, Ask Question on Variance analysis, Get Answer, Expert's Help, Variance analysis Discussions

Write discussion on Variance analysis
Your posts are moderated
Related Questions
1.    Provide at least three characteristics of a corporation (in your own words).   2.   The date on which a cash dividend becomes a binding legal obligation is known

The next year's budget for Benny, Inc., is given below: Product 1 & 2 Sales $945,000 & 688500 Variable costs 459,900 & 297,000 Fixed costs 300

Implementation of Re-Apportionment of Overheads The re-apportionment of service department costs may be implemented in a number of methods. The Two extremes are as a) Wh

Direct Material Price Variances The two direct material price variances can be summarized given as: From our basic data first before the beginning of the discussion on

What is the major value of the weighted cost of capital calculation for the firm?

High-Low method of cost estimation and Number of Photocopies as the cost driver, what would be the resulting cost equation for Maintenance Costs?


A manufacturing company wants to package its product in a rectangular box with a square base and a volume of 32 cubic inches. The cost of the material used for the top is $.05 squa

Pritchard Company manufactures a product that has a variable cost of $30 per unit. Fixed costs total $1,500,000, allocated on the basis of the number of units produced. Selling pri

You are a beginner accountant with a large accountancy firm and a training day has been organised to update all technical staff on a range of topics across numerous technical disci