Question

Consider where you currently work, where you have previously worked, or a well-known company where you would like to work. How would this company utilize variance analysis? What variances do you think would be most significant to the company? Explain. Participate in follow-up discussion by commenting on the posts of your classmates and identifying how specific variances are used to assess performance.

Answer 1

Answer / Explanation:

First, we need to understand what variance analysis is. Variance analysis is the qualitative and quantitative measure of the difference between actual financial value and the budgeted financial value.

This helps us to properly monitor our rate of spending against our profit or loss margin. it also assist in proper fund management.

Now talking about how the company will utilize variance analysis, the company will utilize variance analysis in the aspect of fixed over head spending. In the sense that it will be used to measure manpower productivity against overhead spending. This will help us to proper affirm if the rate of manpower productivity equal fixed overhead spending. In the case where fixed overhead spending is more than man hour productivity ratio, then the company will be running at a loss. This is basically a way of measuring productivity performance of man power and also assets.