Variance analysis attempts to identify discrepancy between actual and planned results. Adverse/unfavourable variance should be investigated – determine cause i.e. inefficiency or external factor, Inefficiency could be caused by lack of motivation or inappropriate training. Steps should be taken to rectify issues. External factors, such as a downturn in market, Continue Reading
Accounting Variance
Variance – difference between budgeted figure and actual figure. Usually at end of budget period. Can be favourable (F) or adverse (A). Favourable variances – actual figure is better than budgeted figure. Adverse variances – actual figures are worse than budgeted figures. Managers examine variances to determine how improvements can Continue Reading
Budgeted and Actual Figures
Budgets set out in financial terms the responsibilities of executives in relation to requirements of organisations policy. Comparing actual results against budgeted results allows managers to meet the objectives of the policy or to determine necessary revisions of the policy. Budgetary controls assist managers with planning, coordinating and controlling of individuals Continue Reading
Monitoring Process
Budgetary control – business looks to future & states what it wants to happen and to achieve, then decides how to get there. How does a department know that it’s performance is satisfactory. Targets set to allow business to know if objectives have been met. Results achieved compared to targets Continue Reading