Importance of variance analysis, Cost Accounting

Assignment Help:

Importance of Variance Analysis

Variance analysis is aimed at getting practical pointers to the purposes of off-the -standard performance hence management can improve operations, raise efficiency, utilize resources more effectively and reduce costs. For this to be achieved, the given need to be met as:

1. A simple standard costing system such is easily well understood via everyone in the organization.

2. Fast and timely reporting of variances at the point of incidence as like to attach responsibility for favourable or unfavourable variance.

3. Rapid management action to accurate adverse unfavourable variances and encourage favourable variances.

4. Utmost commitment to the process of setting standards and performance evaluation via all employees and managers.

Conversely, not all variances are identified and acted upon. Only such types of variances, that fulfill the cost control desires of the organization and meet performance evaluation purposes of the entity are calculated, identified and acted upon. Consequently, the only criterion for the calculation of a variance is its usefulness to the organization: if it is not useful for management reasoned, then it must not be calculated.


Related Discussions:- Importance of variance analysis

Amortization of bond premium for the year, on the first day of the current ...

on the first day of the current fiscal year $2,000,000 of 10 year 7% bonds with interest payable annually, were sold for $2,125,000. Present enteries to record the following transa

Cost, please concept clear me cost accounting for example, we manufacturing...

please concept clear me cost accounting for example, we manufacturing any product

What is cmmi, Capability Maturity Model Integration (CMMI) is a process dev...

Capability Maturity Model Integration (CMMI) is a process development approach that gives organizations with the essential elements of effective processes. It can be used to gui

Sunk costs, Which statement best describes a sunk cost? A a cost which is i...

Which statement best describes a sunk cost? A a cost which is irrelevant for the future B a cost which must be matched against the revenue C a cost which remains the same at all le

Cost accounting, raw an organization chart of any actual or hypothetical ma...

raw an organization chart of any actual or hypothetical manufacturing organization to show the position of management/cost accounting department within an organization and discuss

Job order costing, Amazing acrobatics performs acrobatics in stadiums aroun...

Amazing acrobatics performs acrobatics in stadiums around the world. The average show sells about 1,000 tickets at $60 per ticket. Each show requires a team of 45 highly trained sp

Materials purchased, The Clash Company uses Normal Job-Order Costing in its...

The Clash Company uses Normal Job-Order Costing in its individual production department.  Overhead is applied to jobs by a predetermined rate, which is depend on machine hours.  Th

Allocate joint production costs to each product, Bubble Corporation manufac...

Bubble Corporation manufactures two products, I and II, from a joint process. A single production costs $4,000 and results in 100 units of I and 400 units of II. To be ready for sa

Absorption, Under which inventory costing method could increases or decreas...

Under which inventory costing method could increases or decreases in income from operations be misinterpreted to be the result of operating efficiencies or inefficiencies?

Manufacturing a/c, value of which items are required to be put in a simple...

value of which items are required to be put in a simple format of manufacturing a/c.

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