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

Purpose of cost accounting information, Purpose of Cost Accounting Informat...

Purpose of Cost Accounting Information Cost accounting is employed for a number of reasons, some of that are briefly described in the given points as: a) Accounting for co

introduction of internal rate of return , Introduction of Internal Rate of...

Introduction of Internal Rate of Return The traditional internal rate of return (IRR) method of project selection has been shown to be inferior to the NPV method due to vario

The cost per complete unit, In a given period production and cost data were...

In a given period production and cost data were as follows:     Total Costs   Materials   Rs. 5,115                      Labour          3,952                     Overheads

Calculate the cash flows for each alternative, A company is evaluating the ...

A company is evaluating the following lease or buy option. A four year lease with annual payments of $25,000 payable at the beginning of the year.The tax shield is available at

Calculate the cash flow - capital cost, A company is evaluating the followi...

A company is evaluating the following lease or buy option.  A four year lease with annual payments of $25,000 payable at the beginning of the year. The tax shield is available a

Computerized packages, types of computerized packages .its cost .features s...

types of computerized packages .its cost .features size of the business is intended to service

Job Order Costing, Bedovin Company manufactures office tables and chairs us...

Bedovin Company manufactures office tables and chairs using the job order cost system

First in first out or fifo method - work in progress, First In First Out or...

First In First Out or FIFO Method - Work in Progress This method considers merely those costs incurred throughout the recent period.  Equivalent units are calculated given a

Exploration costs, are exploration cost treated as an asset or expense or b...

are exploration cost treated as an asset or expense or both?

What is a statement of cash flows, 1.What is a Statement of Cash Flows? How...

1.What is a Statement of Cash Flows? How does it differ from an Income Statement? 2.What unique information does the Statement of Cash Flows deliver to investors? Why do they care?

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