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

Outstanding expenses, Expenses are usually recorded only while they are pai...

Expenses are usually recorded only while they are paid. The failure to record unpaid expenses in the accounts outcomes in an understatement of which expense and also an understatem

Business management, Business Management Business Management includes ...

Business Management Business Management includes planning and staffing, organizing, directing and controlling an organization's activities so like to meet a specified objectiv

Determine the depletion cost per board foot, Conan O'Brien Logging and Lumb...

Conan O'Brien Logging and Lumber Company owns 3,300 acres of timberland on the north side of Mount Leno, which was purchased in 2000 at a cost of $650 per acre. In 2012, O'Brien be

Classification of labour costs, Classification of Labour Costs This ca...

Classification of Labour Costs This can be classified into like: a) Indirect or Direct cost b) Variable or Fixed cost c) Non controllable and controllable cost a)

Semi variable costs, Semi Variable Costs Are costs along with both a f...

Semi Variable Costs Are costs along with both a fixed and variable cost component? The fixed component is such portion that is constant irrespective of the level of activity.

Mini Report about Brand Image, Write a mini report in which you "Critically...

Write a mini report in which you "Critically Describe, Aanlyse and Reflect on the Brand Image Extension.  This task must include evidence of collection primary data on the same

Calculate direct materials used, Advertising expense $17,200 Wages expense-...

Advertising expense $17,200 Wages expense-assemblers 36,840 Depreciation expense-machines 21,480 Utilities expense-factory 21,120 Wages expense-lathe operators 23,480 Repair expens

Manufacturing, What are the reasons of preparing income statement?

What are the reasons of preparing income statement?

Compute the cost of goods - periodic inventory method, Beginning inventory ...

Beginning inventory on March 1 consisted of 2,000  units each costing $11.20 . During March, the following was purchased for inventory: Date Purchase

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