Question

The employee groups that deserve praise or may be subject to criticism for the total variable expenses flexible budget variance and the total fixed expenses flexible budget variance depends

Answer 1

Answer:

The employee groups that deserve praise or may be subject to criticism for the total variable expenses flexible budget variance and the total fixed expenses flexible budget variance depends on the factors that derives the overall variance which are production variances versus selling and administrative  variances, including the separate variances that effect them on an individual basis.

Explanation:

In order to determine the employee group that deserves praise or criticism, each part of the budget must be looked at separately. The overall flexible budget may be favourable or unfavourable, however, the result of which might be due to production and/or selling & administrative budget being favourable or unfavourable. Details of which is shown below:

Production budget is derived from the result of total direct materials variance, total manufacturing overhead variance and total labour variance. When we go further the direct material variance is the result of direct material cost variance, which is under the supervision and responsibility of purchasing manager, and direct materials efficiency variance, which is controlled by the production manager.

The total direct labour variance is the result of the direct labour cost variance, which is handled by the human resource manager, and direct labour efficiency variance, which is also under the supervision of production manager.

The total variable manufacturing overhead variance is the result of variable overhead cost and efficiency variance, both of which is controlled by the production manager. While in the case of fixed overhead variance which is the result of fixed overhead cost variance, handled by the production manager, and fixed selling and administrative variance, which is being controlled by the marketing and/or sales manager.

Determining the effect of each variance (whether favourable or unfavourable) is the result of determining the whether and by how much an employee is to be praised or criticised.