Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
23 Cards in this Set
- Front
- Back
|
What elements affect performance?
|
Activity
Cost Prices |
|
|
What are the general types of variances?
|
Sales variances
Material variances labour variances Overhead variances |
|
|
What is an overhead variance?
|
A variance in spending and efficiency
|
|
|
When should a variance be analysed?
|
- When the variance is big enough and the potential imrovement outweighs the cost. However, some variances fluctuate randomly within certain normal limits
|
|
|
What are the limitations of variance analysis?
|
- Variances based on cost don't differentiate between output and quality problems
- Variances can be geared towards wrong people - Explenations of variances may be ignored and no action is taken |
|
|
What is the key use of variances and what are the attributes?
|
Key use os performance evaluations with attributes of efficiency and effectiveness
|
|
|
What is effectiveness?
|
The degree to which a predetermined objective or target is met
|
|
|
What is efficiency?
|
The relative amount of inputs used to achieve a given level of output
|
|
|
Why does one have to be careful of using variances as performance measures?
|
Variances could arise becasue of many different reasons
|
|
|
What is the effect of too much emphaiss on one performace measure?
|
Managers tend to make decisions that maximise their own performance in terms of that single measure
|
|
|
What can variances and flexible budgets be used for?
|
Measure specific types of performance goals such as continuous improvement
|
|
|
What is the continuous improvement budgeted cost?
|
A budgeted cost that is successively reduced over time
|
|
|
What is the advantage of a total value chain approach to variance analysis?
|
It recognises the diversity of the possible sources of variances
|
|
|
What is the most important task of variance analysis?
|
To understand why variances arise and then use that knowledge to promote learning and improve performance
|
|
|
How to calculate a flexible budget variance?
|
FBV = Actual cost - Flex-B-cost
|
|
|
How to calculate a flexible budget?
|
Use actual output and then find the cost and revenues which SHOULD have been with the actual output and static budget allowances
|
|
|
Calculate price variance
|
Price variance = (actual price- budgeted price) * actual quantity
|
|
|
Calculate efficiency
|
Efficiency variance = (actual quantity of inputs - budgeted quantity for actual inputs) * budgeted price
|
|
|
What is benchmarking?
|
The continuous process of measuring products, services, activites against the best levels of performance which may be internal or external.
|
|
|
What are the main approaches to palnnign and controlling?
|
Variable and fixed
|
|
|
What are the main approaches to planning and controlling fixed costs?
|
- Planning in detail, includinf providing incentives to estimate budgets in an unbiased way
- Make careful, cost-concious planning decisions on individual line items |
|
|
What are the main approaches to planning and controlling variable costs?
|
- avoid non-value-adding activities
- working on reducing the rate per cost driver or the number of cost drivers - monitor variances on an ongoing basis - assign responsibilities for the variances to managers |
|
|
What does a 4-variance analysis present?
|
- spending and efficiency variance for variable overheads
- spending and product-volume variances for fixed overheads |
