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Chapter 10

Advanced variances

Outcome

By the end of this session you should be able to:

 Calculate, from information supplied, material mix and yield variances • for
given or calculated material mix and yield variances, interpret and explain
possible causes, including possible interrelationships between them

 explain, using simple non-numerical examples, the wider issues involved in
changing mix, e.g. cost, quality and performance measurement issues

 identify and explain the interrelationship between price, mix and yield variances

 using revised standards supplied, calculate a revised budget

 Calculate planning and operational variances for sales (including market size
and market share), materials and labour

 Explain and resolve the typical manipulation issues in revising budgets

 describe the dysfunctional nature of some variances in the modern environment
of Just-in-time (JIT) and total quality management (TQM)

 describe the major behavioural problems resulting from using standard costs in
rapidly changing environments

 discuss the major effects that variances have on staff motivation and action

and answer questions relating to these areas.

The underpinning detail for this Chapter in your Integrated Workbook can
be found in Chapter 10 of your Study Text

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