What does the concept of ‘management by exception’ mean and what factors are considered when assessing the significance of a variance?

Q: Why do we need to have a "base" for the computation of different types of variances under gross…

A: Gross Profit: It is calculated by subtracting operating expenses from the operating income for the…

Q: Why are unfavorable variances recorded by using debitentries and favorable variances recorded by…

A:

Q: What is the interpretation of the direct-material quantity variance?

A: Direct material quantity variance is a variance analysis tool for manufacturing companies. It shows…

Q: hat ty

A: Variance analysis is a summary statement which demonstrate the difference between planned…

Q: Explain what is meant by the term management by exception. What is the relationship between the…

A: Management by exception: Under this style of management, employees are allowed to take decisions…

Q: Explain the difference between a favorable and an unfavorable variance.

A: Variance: The term variance is used under standard costing system. Variance is actually the…

Q: How are budget variances calculated and used as performance measures? Provide numerical example?

A: budget is the predefined calculations that provide the plan of using the resources and generating…

Q: Provide one caveat that will affect whether a production-volume variance is a good measure of the…

A: Economic cost of unused capacity:The economic cost of unused capacity indicates the amount that…

Q: A statistical control chart is best used for determining: A. direct-material price variances. B.…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: “The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding…

A: “The direction of a variance (favorable or unfavorable) is irrelevant in decisions regarding is…

Q: variances

A: Variance means change Variances arise after comparison with standard to Actual.   Types of Variances…

Q: When management uses variance reports to evaluate cost control, they look into which of the…

A: Standard costing means where standard is set for various cost element and actual cost is then…

Q: Justify the favorable or unfavorable budget variances

A:

Q: Which of the following variances is least likely to be controlled by manager? Volume variance…

A: Solution Concept Volume variance : This variance occurs when there is difference between quantity…

Q: What are some possible reasons for a material price variance?

A: The reason for material price variance has been shown below

Q: Which of the following items would be useful to management in deciding whether to investigate the…

A: Standard costs are the budgeted costs related with the production, manufacturing and selling of…

Q: What effect, if any, would you expect poor-quality materials to hare on direct labor variances?

A: Direct labor variance arises due to the differences in the actual and budgeted rates of wage or…

Q: What should be the organizational purpose for identifying and calculating variances?

A: Management accounting:   It is the process of preparing the reports of a business operations helping…

Q: what is a variance? b. when might a favorable variance not be a good outcome?

A: Standard Costing System: The Standard Costing system provides for cost estimation, budgeting for…

Q: Describe a common but misleading interpretation of the fixed-overhead volume variance. Why is this…

A: Flexible Budget:   A flexible budget is a budget that is prepared for different levels of the…

Q: How do you find the standard quantity for efficiency variance?

A: Management should pay particular attention to those that are uncommon or noteworthy. Firms may…

Q: Explain why the quantity purchased (PQ) is used in computing the direct-material purchase price…

A: Material Purchase Price Variance: Material price variance occurs when the price expected to purchase…

Q: unfavorable variances result from

A: Unfavorable variance:-It is a result of lower sales, higher expenses, or combination when actual…

Q: re all variances investigated? Why or why not?

A: Variance: A variance reflects the degree by which the actual results vary from the anticipated or…

Q: Further analyze harlows revised variances, isolating underlying potential casual factors.  How do…

A: 1.Direct material Price variance =(Std. Price/qty.-Actual price/qty)*Actual qty. 2. Direct material…

Q: a. Break down the material cost variance into different related variances: price variance, usage…

A: Variance analysis: It is the technique in budgeting that allows for analysis of the variances…

Q: What types of variances are found on cost center reports? Explain what each variance is measuring…

A: The variances found in the cost center report are determined by measuring actual performance against…

Q: How frequently do you believe that firms should conduct variance analysis? Explain why?

A: Variance analysis a technique of control that is used by organisations to compare actual costs with…

Q: When variances have been determined, management should, decide whether each variance is sufficiently…

A: Variance analysis is usually undertaken by manufacturing organizations that involve direct…

Q: Comment on the statement “A favourable variance is always better than an adverse variance” by…

A: Variance is the difference between actual numbers and budgeted numbers. Variance can be favourable…

Q: Which of the following is FALSE regarding variances? O A favorable variance, when it occurred, are…

A: Standard costing refers to the method of costing used to find out the variances. Standard overhead…

Q: in preparing variance analysis for both variable overhead and fixed overhead costs, both include…

A: The answer for the theory question on Spending variances is discussed hereunder :

Q: management by exception”

A: Management by exception is used when there are substantial deviations between the desired and actual…