8. Other Variances Flashcards
When is it useful to break volume variances into mix and quantity elements?
When the company sells more than one product and the products are to some extent linked (e.g. complementary, substitutes or using the same resources)
What is the equation for sales mix variance?
Standard contribution value of the actual sales volume if at standard mix - actual value of sales
What is the equation for sales quantity variance?
(Actual volume at standard mix - budgeted volume) x standard contributions
What are the possible causes of favourable sales mix variance?
An upswing in the economy leading customers to purchase more expensive goods, successful marketing campaigns of the higher contribution product, less competition for that product
What are the possible causes of favourable sales quantity variance?
An increase in the overall market size, good performance by the sales team
What are 3 alternative methods of controlling production processes?
- Continuous supervision and monitoring
- Staff training
- Customer feedback
For what 2 reasons should a budget be revised?
- Poor planning
2. Uncontrollable factors
What are market size and market share variances?
Sales volume planning variances and sales volume operating variances
What is an operational variance?
A classification of variances in which non-standard performance is defined as being that which differs from an ex-post standard. Operational variances can relate to any element of the standard product specification
What is a planning variance?
A classification of variances cause by ex ante budget allowances being changed to an ex post basis
What are the 4 principle components of McDonaldisation?
- Efficiency
- Calculability
- Predictability
- Control
What are used to set standards in the healthcare sector?
Diagnostic Related (Reference) Groups (DRGs)
