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

West Industries, West Industries is a highly decentralized corporation with...

West Industries is a highly decentralized corporation with independent operating divisions. Each division is evaluated and rewarded based on its total net income. One of the divisi

Compute the cost per unit, Fosson Furniture uses a process cost system to a...

Fosson Furniture uses a process cost system to account for its chair factory. Beginning inventory consisted of 5,000 units (100% complete as to material, 55% complete as to labor)

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

Principles of incremental revenue and relevant costs, Shortflower Ltd curre...

Shortflower Ltd currently publishes, prints and distributes a range of catalogues and instruction manuals. The management has now decided to discontinue printing and distribution a

Compute the variable cost, A soft drink maker wants to expand into a neighb...

A soft drink maker wants to expand into a neighboring country.  They want the product bottled in that country to avoid political issues and to enhance the local image of the produc

Marginal costing.., importance of marginal costing &standing costing

importance of marginal costing &standing costing

Optimal profit maximizing pricing strategy, Now assume that it is possible ...

Now assume that it is possible to distinguish consumer types one and two and there are no consumers of type three and the firm can charge a two part tariff. What would the optimal

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