Discussion 2: Variance Analysis and Responsibility
VARIANCE ANALYSIS AND RESPONSIBILITY
Please respond to the following discussion question. Your response should fully address all elements of the question and be a minimum of 200 to 300 words long. The response and two replies to other posts in this string are due by Monday night, 11:59 Phoenix server time. See the Instructor Policies in the Resource Folder for a complete description of class participation requirements.
-A good control system places the blame for every unfavorable variance on someone in the organization. Without assigning blame, no one will take responsibility for cost control.” Do you agree? Explain why or why not.
By Melissa
The statement made towards a good control system places the blame for every unfavorable variance on someone in the organization. Without assigning blame, no one will take responsibility for cost control. I have read this statement over and over trying to determine they why or why not on agreement. For example at our school facility cost control when selling snacks to our students is handled by the principal, counselor, clerk, secretary, P.E. coach, TOR employee, or other front office employee who is available at the time to sell snacks. Look at how many employees are handling the money that is being received from the students and faculty who are purchasing snacks. I have observed whereas blame is placed on the secretary and the TOR employee because they are the last employees to calculate the money according to the amount of variety snacks that were out for sale at $0.50 per item. Cost of control is out of control in this area because to many hands or in the pot and employees will show up and state they will come back and pay for their purchase later in which will lead to cost of control. The solution to this unfavorable variance is to make sure the snack is paid for on receiving, count the snacks that are up for sale ,and delegate two specific people to count and compare the funds and total count of products sold and choose an alternate individual when one of the delegated individual is absent. I agree no one wants to be blamed for unfavorable variance, and with all these individuals involved how will cost be controlled. Some organization will take the money out of your paycheck if you are blamed for the unfavorable variance if it occurs to many times.
By Ginny
A good control system looks to see where there is a variance that is unfavorable and then places the blame on that person. Because if they didn’t no one would take responsibility for any of the variance in the cost. This is great point, but there are certain variances that are no one persons fault and I don’t think pointing fingers at just one person saying they are the one that made this happen. Some cost and variances happen that are one persons fault it could be they did not follow a policy or procedure and make an over payment, yes it is a mistake but if they followed the procedures and made the mistake of an over payment then they are responsible but it is a problem with the procedure and that should be looked at to. ensure it doses not happen again. If they did not follow procedure and made an over payment then all the blame would be on that person and they would have to take the consequences for that mistake. Being a shift manager we have first hand control on the cash for our machines, sometimes we have to hand pays or void and pay out for lost tickets. We have very strict policies for these that we follow but yes we are human and do make mistakes and do take responsibility for it and what ever discipline. I think that all cost and any variances have to be accounted for sometimes it is one department, product or employee and sometimes its a collective.
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VARIANCE ANALYSIS AND RESPONSIBILITY
Variance analysis plays a very important role in controlling a business. This analysis involves comparing actual direct material cost to standard direct material cost. To avoid any errors in evaluating variance, an entrepreneur is required to divide total direct material variance into two;(1) material price variance that compares the standard price of goods bought to the actual price.
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