Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 A key point in this problem is that all of these efficiency variances are likely to be insignificant. They are so small as to be nearly meaningless. Fluctuations about standards are bound to occur in a random fashion. Practically,
from a control viewpoint, a standard is a band or a range of acceptable performance rather than a single-figure measure.
3 The purchasing point is where responsibility for price variances is found most often. The production point is where responsibility for efficiency variances is found most often. Drogheda Chemical Ltd may calculate variances at different points in time to tie in with these different responsibility areas.
Share with your friends: 
