F5-13 Planning and Operational Variances.pdf - Session 13 Planning and Operational Variances FOCUS This session covers the following content from the

F5-13 Planning and Operational Variances.pdf - Session 13...

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F5 Performance Management Becker Professional Education | ACCA Study System FOCUS This session covers the following content from the ACCA Study Guide. (continued on next page) Session 13 Session 13 Guidance C. Budgeting and Control 7. Planning and operational variances a) Calculate a revised budget. b) Identify and explain those factors that could and could not be allowed to revise an original budget. c) Calculate, identify the cause of and explain planning and operational variances for: i) sales, including market size and market share; ii) materials; iii) labour, including the effect of the learning curve. d) Explain and discuss the manipulation issues involved in revising budgets. 8. Performance analysis and behavioural aspects a) Analyse and evaluate past performance using the results of variance analysis. b) Use variance analysis to assess how future performance of an organisation or business can be improved. e) Discuss the effect that variances have on staff motivation and action. g) Describe the dysfunctional nature of some variances in the modern environment of JIT and TQM. h) Discuss the behavioural problems resulting from using standard costs in rapidly changing environments. Understand why a variance may be revised prior to variance analysis taking place and that managers may try to "bend" the system by having variances revised to disguise inefficiencies. This is an area the examiner likes to discuss (s.1). Recognise the difference between planning variances and operational variances (s.2.1). Master the calculations of planning and operational variances. Planning and Operational Variances Ali Niaz - [email protected]
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© 2014 DeVry/Becker Educational Development Corp. All rights reserved. 13- 1 Session 13 Guidance Know the method of accounting for a learning curve when determining a standard (s.2.3). Recognise how unrealistic standards affect morale and output (s.3). VISUAL OVERVIEW Objective: To consider when standards and budgets should be revised, the calculations in such circumstances and the effect of using variance analysis on the behaviour of managers and employees. REVISION OF BUDGETS AND STANDARDS PLANNING AND OPERATIONAL VARIANCES Problems of Traditional Analysis Calculations Learning Curve and Labour Market Volume and Market Share Advantages and Disadvantages Manipulation BEHAVIOURAL ASPECTS OF STANDARD COSTING Staff Motivation and Action Variances and Performance Evaluation Relevance Under JIT and TQM Behavioural Patterns Ali Niaz - [email protected]
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Session 13 • Planning and Operational Variances F5 Performance Management 13- 2 © 2014 DeVry/Becker Educational Development Corp. All rights reserved. 1 Revision of Budgets and Standards At the end of a budget period, prior to comparing the actual performance of an organisation against the budget, budgets may be revised to take account of changes within the environment which were not anticipated when the budget was prepared. The reason for such revision is that because managers are judged on
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