By comparing predicted and actual financial outcomes, variance analysis provides insights into various aspects of your business operations, helping you identify areas of improvement and make informed decisions.
Managers should not be held responsible for planning variances for several key reasons, primarily related to the nature of these variances and the factors that contribute to them: *Uncontrollable External Factors *Planning variances often arise due to external factors beyond the control of managers. These can include changes in economic conditions, market trends, regulatory changes, natural disasters, or other unforeseen events. For example, if a sudden increase in raw material costs due to geopolitical tensions impacts the budget, it would be unreasonable to hold managers accountable for these unanticipated external influences.
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Well done sir
What are the benefits of analysing variances into planning and operational elements?
By comparing predicted and actual financial outcomes, variance analysis provides insights into various aspects of your business operations, helping you identify areas of improvement and make informed decisions.
Thanks for a wonderful response
What causes planning and operational variances?
Planning variances: caused by inaccurate budgets and standards. Operational variances: caused by operational decisions and performance.
sir why shouldn't we held managers responsible for planning errors
Managers should not be held responsible for planning variances for several key reasons, primarily related to the nature of these variances and the factors that contribute to them:
*Uncontrollable External Factors
*Planning variances often arise due to external factors beyond the control of managers. These can include changes in economic conditions, market trends, regulatory changes, natural disasters, or other unforeseen events. For example, if a sudden increase in raw material costs due to geopolitical tensions impacts the budget, it would be unreasonable to hold managers accountable for these unanticipated external influences.