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

Show the objective of accounting standards, A sound foundation is necessary...

A sound foundation is necessary for success in any task from building a house to putting on make up. In terms of U.S Accounting standards it is necessary to have a sound foundatio

LIFO, I need an example for Lilo,Fifo, and weighted average method for a ye...

I need an example for Lilo,Fifo, and weighted average method for a year. Jan.begining inventory, purchases in Feb., April, July, October, and November. Can you help me with this?

Abnormal loss account and abnormal gain account, A product is manufactured ...

A product is manufactured by passing through three processes: A, B and C. In process C a by-product is also produced which is then transferred to process D where it is completed. F

Calculate development cost, Candler Inc a computer software development fir...

Candler Inc a computer software development firm has stock outstanding as follows: 40,000 shares of $2 nonparticipating, noncumulative preferred stock of $10 par, and 250,000 share

Costing term, The San Carlos Company is an electronics business with eight ...

The San Carlos Company is an electronics business with eight product lines. Income data for one of the products (XT-107) for June 2011 are as follows: Revenues, 200,000 units at av

Find out the memorandum reconciliation account, Find Out the Memorandum Rec...

Find Out the Memorandum Reconciliation Account The givens are the final accounts of a company for the year ending on date 31st December 1999. Manufacturing Trading Loss and Pr

CVP Break even analysis, Bottoms Up company produces high quality sports eq...

Bottoms Up company produces high quality sports equipment. the companie''s racket division manufactures three tennis rackets- the Standard, Deluxe and the Pro that are widely used

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