Explain the meaning and relevance of interdependence of variances when reporting-新东方在线职业题库

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Explain the meaning and relevance of interdependence of variances when reporting to managers.

Chapter20Standardcosting

Interdependence of variances is the term used to describe the situation when there is a single cause of a number of variances.

For example, the use of a higher grade of labour than was anticipated is likely to cause an adverse labour rate variance, a favourable labour efficiency variance, and possibly a favourable material usage variance (due to more experience of working with materials).

It is important that when variances are reported, the possibility that some of them may have a common cause should be acknowledged, and managers encouraged to work together for the benefit of the organisation.

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What does an adverse variable overhead efficiency variance indicate and what might be the cause?

Explain briefly the possible causes of

(i) A favourable material usage variance

(ii) A favourable labour rate variance

(iii) An adverse sales volume contribution variance.

What is the relationship between the labour efficiency variance and the variable overhead efficiency variance? Why might the monetary value be different?

Explain the meaning and relevance of interdependence of variances when reporting to managers.

A balanced scorecard measures performance 什om four perspectives: customer satisfaction, growth, financial success and process efficiency. Briefly explain these processes.

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