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

Determine sales revenue and net income, Students will prepare a Comprehensi...

Students will prepare a Comprehensive Master Budget and Budgeted Financial Statements for Earrings Unlimited for the three-month period ending June 30. This includes: Sales Budg

Critical thinking about cost flow, Critical Thinking about Cost Flow It...

Critical Thinking about Cost Flow It is simple to overlook an important aspect of cost flow within a manufacturing operation. If you see that have taken note of an important co

Calculate labour time or efficiency variance, standard hours = 5000 standa...

standard hours = 5000 standard wages = Rs.3/hr actual hours worked = 5600 hrs actual wages paid = 17920

Generally accepted accounting principles, Generally Accepted Accounting Pri...

Generally Accepted Accounting Principles (GAAP) -Rules, conventions and procedures essential to define accepted accounting practice at a specific time. The highest level of such pr

Marginal cost, Marginal Cost Marginal cost is the change in a firm's co...

Marginal Cost Marginal cost is the change in a firm's cost of production. It is related to a unit change in its output, or the added cost of producing the next unit. The margin

Draw the demand curve - quantity of trash, The total demand (marginal benef...

The total demand (marginal benefit) curve for visiting Yosemite is as follows: Price = 5000-10*NumberOfTrips -10*TonsOfVisibleTrash.     a. Suppose the quantity of trash=100 ton

Considerations in variance investigation, Considerations in Variance Invest...

Considerations in Variance Investigation As already notice above, not all variances are investigated; this is only the material and meaningful as for cost control reasons vari

Identify the income statement and balance sheet, In January 2012, the manag...

In January 2012, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the fol

Approach in cost accounting, Approach in Cost Accounting Cost accounti...

Approach in Cost Accounting Cost accounting is based on the framework or concept of cost centers that is all the costs incurred throughout the production process contain to be

Funds from operations, Consider as Illustration. Profit and loss account of...

Consider as Illustration. Profit and loss account of TIL demonstrates, that, operations have given gross addition of Rs. 360 million to funds throughout the period. These funds sho

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