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Describe two approaches used to compute variances

Describe two approaches used to compute variances

Answers

Faith
1. Traditional Approaches

Management focuses mainly on change in prices and inputs. Seeks to explain the change in profits i.e change in revenues and change in costs. We seek to explain changes in output prices and change in output quantities.
fig12102021120117.PNG

Types of Output Variances
Labour - Labour rate variance
- Labour efficiency variance

Materials- Material price variance
- Material usage variance

Overheads - Variable overhead rate variance
- Variable overhead efficiency variance
- Fixed overhead variance – volume variance
- Capacity variance
fig12102021120718.PNG
fig12102021121219.PNG
fig12102021121320.PNG
Titany answered the question on October 12, 2021 at 09:17

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