Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
15.9 An
individual business function, such as production, is interdependent with other business functions. Factors outside production can explain why variances arise in the production area. For example
• Poor design of products and processes can lead to a sizeable number of defects.
• Marketing personnel making promises for delivery times that require a large number of rush orders that create production scheduling difficulties.
15.10 The plant supervisor has good grounds for complaint if the plant accountant puts excessive emphasis on using variances to pin the blame on. The key value of variances is to help understand why actual results differ from budgeted amounts and then use that knowledge to promote learning and continuous improvement.
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