Should a manager ever be concerned that a variance is too favorable? If so, why?
Should a manager ever be concerned that a variance is too favorable? If so, why?
Homework Answers
Yes, a manager should be concerned that a variance is too favorable because variance basically is a difference between actual costs and budgeted costs. If a variance is too favorable, then there can be an error while determining budgeted costs. Prices in the short-term generally do not fluctuate much due to which there can be a difference between actual and budgeted costs. However, one cannot deny the possibility of high fluctuations on the basis of some positive or negative news relating to that particular industry which can be favorable. But, if this isn't the case then the possibility of calculating erroneous budgeted costs is high. So, keep the budgeted costs in check.
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Should a manager ever be concerned that a variance is too
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Can you please explain why it favorable and unfavorable. thank you. P 9-A Variance Analysis (In...
Can
you please explain why it favorable and unfavorable. thank
you.
P 9-A Variance Analysis (In Class) Pear Company is a manufacturing firm that specializes in the production of a single product. Overhead is applied based on direct labor hours. Standard Cost Card (budget for one unit) The standard cost card shows the manager what the final manufactured cost should be for the company's product. Standard Standard Quantity Price Standard or Hours or Rate Cost Direct Materials 3.5 feet х...
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A manager is concerned that there isn't enough time spent on production and too much time spent on setups. The manager decides to double all production batch sizes. This change has no impact on demand. What impact will this likely have on the average inventory in the process? °Average inventory will decrease because the capacity of the resources will increase. °Average inventory will remain the same because demand has not changed. °Average inventory will increase because larger batches require more...
Which of the following does not result in a favorable direct materials price variance? 0 A. The purchasing manager changed to a lower-price supplier. O B. The price of direct materials decreased as a result of Industry oversupply ° C. Budgeted purchase prices of direct materials were set too low without careful analysis of market conditions. 0 D. The purchasing manager negotiated the direct materials prices more skillfully than was planned for the budget O E. The purchasing manager ordered...
Can
you please explain why it favorable and unfavorable. thank
you.
P 9-A Variance Analysis (In Class) Pear Company is a manufacturing firm that specializes in the production of a single product. Overhead is applied based on direct labor hours. Standard Cost Card (budget for one unit) The standard cost card shows the manager what the final manufactured cost should be for the company's product. Standard Standard Quantity Price Standard or Hours or Rate Cost Direct Materials 3.5 feet х...
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