Question

(please type the answers) (accounting 640)

Consider variance analysis in a service industry. Is it a good thing to use or a bad thing to use? Why? What good behaviors could it encourage? What bad behaviors might it encourage? Consider a service industry you are familiar with or something like a call center or tax practice in your discussion

Answer 1

Variance analysis is a quantitative findings/outcome of difference between actual and planned event/behavior/data.

Pros of variance analysis:

1. Analyse the trende and performance

2. Control incurring of expenditure by setting budget objective

3. Setting roles and responsibility.

4. Understand cause of variations & fluctuations

Cons of variance analysis

1.time delay

2. Non evalutions of variance by management

3. Standard setting and variance source information