Assignment of variance in variance calculation, Cost Accounting

Assignment Help:

Assignment of Variance in Variance Calculation

In variances calculating, the calculations require to be detailed sufficient hence the responsibility for the variance can be assigned to a particular individual.  It is necessary since it would be almost not possible to control costs if the responsibility for a specific variance is spread among many managers as each of them will "pass the buck" or reject to accept personal responsibility for the variance.

As an example: the material cost variance can be analyzed into usage variance and price variance.The usage variance is the responsibility of the foreman or production manager utilizing those materials, whereas the price variance is the responsibility of the purchasing manger.

The above example demonstrates how variance analysis is employed to attach responsibility for cost variances to individuals. Those individuals cannot claim such they are not responsible for the variances arising. Conversely, to be able to attach that responsibility, the costs must be controllable via the concerned individuals. Because of tendency of budgetary control and standard costing variance analysis responsibilities to individuals, it is normally referred to as responsibility accounting.  However where departments are interdependent, then responsibility accounting may not be straight forward because of inefficiencies or efficiencies brought in from other departments.


Related Discussions:- Assignment of variance in variance calculation

Calculate break-even level of sales volume and revenue, Q. Calculate break-...

Q. Calculate break-even level of sales volume and revenue? Z-Boxes sell for £299 and their variable production cost is £99. Research and development, and fixed production overh

What is the probability that a randomly selected bike, A bicycle plant runs...

A bicycle plant runs two assembly lines, A and B. 96.9% of line A's products pass instruction, while only 93.8% of line B's products pass inspection. 70% of the factory's bikes com

Activity-based costing and throughput accounting, The  basic  principles ...

The  basic  principles  of  standard  costing  and  variance  analysis  may  be  adapted  to  the needs of  relatively  new  methods  of  accounting  such  as  activity-based  cost

Prepare a report for profitability of a company, The following information ...

The following information has been prepared for XYZ Ltd by their assistant accountant. The risk free rate of interest on government securities in 2008 is 7.3% Required:

What are total fixed cost, Corporation has determined the contribution marg...

Corporation has determined the contribution margin ratio is 35% and the income tax rate is 40%. Required: A) Assume break-even volume in dollars is $1,500,000. What are total fixed

Cost of goods manufactured statement., These balances for a company x Ra...

These balances for a company x Raw materials $40,000 Work in process $30,000 Finished goods $60,000 for the current year the company estimated that it would work 150.000 mach

Depreciable cost, A organization is evaluating a proposed 4-year project.  ...

A organization is evaluating a proposed 4-year project.  The depreciable cost will have the following: $300,000 for the equipment, $20,000 for shipping, and $30,000 for installatio

Comparison between marginal and absorption costing, Comparison between Marg...

Comparison between Marginal Costing and Absorption Costing There are accountants who favour all costing method. Arguments in favour about absorption costing are specified a

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd