Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Two possible explanations for the manager's statement are 1

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17.7
Two possible explanations for the manager's statement are
1
The plant manager has no flexibility in determining the direct material or the direct manufacturing labour content. If a plant is highly automated, it is likely that a computer program would calculate the specific direct materials or manufacturing labour content.
2
The plant manager believes that other (probably non-financial) information is sufficient to manage costs on a day-to-day basis.
17.8
A favourable sales-quantity variance arises because the actual units of product sold exceed the budgeted units of product sold.
17.9
The sales-quantity variance can be decomposed into (a) a market-size variance (the actual total market-size change from that of the budgeted) and (b) a market-share variance (the actual market share change from that of the budgeted. Both variances use the budgeted average selling price per unit, when the focus is on revenues.

Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
17.10
Some companies, which believe that reliable information on total market size is not available, choose not to calculate market-size and market-share variances.

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