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

Forecasting future cash flow and implement capital budgeting, It is the yea...

It is the year 2012. The Chief Executive of XYZ Systems Plc, a growing firm in the telecommunication sector, has called your team for an important meeting. "We are expanding": he s

Operating cycle of a merchandiser, Explain and illustrate with your own exa...

Explain and illustrate with your own example the operating cycle of a merchandiser.   Explain and  illustrate the differences between a multiple-step income statement and a single

Absorption of non production overheads in production cost, Absorption of No...

Absorption of Non Production Overheads in Production Cost Product costs may be compiled for a range of purposes including a) Stock valuation b) Product pricing c) Dec

Draw the optimal expansion path of the firm, A firm uses capital and labor ...

A firm uses capital and labor to produce a single output good. The production function is given by F(K, L) = K 2 L where K is the amount of capital and L is the amount of labor em

Regression analysis- linear cost function, given the following : Constan...

given the following : Constant $21,800 Std.error of Y Est. 4,500 R squared 0.7832 Observations # 22 X coefficient 11.75 Std.error of Coef.

Variable production cost , From  the  following  data  write the  standard ...

From  the  following  data  write the  standard  cost  card  for  one  unit  of  the  sole  product manufactured.                                    Standard Cost card for One U

QUESTION AND ANSWER, question and answer: XYZ trading purchased 6,850 killo...

question and answer: XYZ trading purchased 6,850 killos of material at a total cost of 21,920.00. The material price variance was 1,370.00 favorable. The standard price per killo w

Changes in product mix, Changes in Product Mix A change in product mix...

Changes in Product Mix A change in product mix in which individual products have different contribution will contain different contribution. Sales ratio will conclude in a cha

Direct cost as a relevant cost, Direct Cost as a Relevant Cost Direct ...

Direct Cost as a Relevant Cost Direct costs may be directly chargeable to a cost center or a product. They may be fixed costs or variable costs whereas it comes to decision-ma

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