tools-for-enterprise-performance-evaluation

Of 32200 were charged you willto specific variance

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Unformatted text preview: ces of $32,200 were charged/ You willto specific variance accounts.of $686,800 corresponds to the amounts spent is fully credited notice that the standard cost By so doing, the full $719,000 actually assigned to work in process inventory via the various journalRail. accounted for in the records of the Blue entries, while the total variances of $32,200 were charged/ credited to specific variance accounts. By so doing, the full $719,000 actually spent is fully accounted for in the records of the Blue Rail. Download free ebooks at bookboon.com 40 Variance Analysis Tools for Enterprise Performance Evaluation 4.19 Examining Variances Not all variances need to be analyzed. One must consider the circumstances under which the variances resulted and the materiality of amounts involved. One should also understand that not all unfavorable variances are bad. For example, buying raw materials of superior quality (at higher than anticipated prices) may be offset by reduction in waste and spoilage. Likewise, favorable variances are not always good. Blue Rail’s very favorable labor rate variance resulted from using inexperienced, less expensive labor. Was this the reason for the unfavorable outcomes in efficiency and volume? Perhaps! The challenge for a good manager is to take the variance information, examine the root causes, and take necessary corrective measures to fine tune business operations. In closing this discussion of standards and variances, be mindful that care should be taken in examining variances. If the original standards are not accurate and fair, the resulting variance signals will themselves prove quite misleading. Please click the advert Are you considering a European business degree? LEARN BUSINESS at univers ity level. We mix cases with cutting edg e research working individual ly or in teams and everyone speaks English. Bring back valuable knowle dge and experience to boost your care er. MEET a culture of new foods, music and traditions and a new way of studying business in a safe, clean environment – in the middle of Copenhagen, Denmark. ENGAGE in extra-curricular acti vities such as case competitions, sports, etc. – make new friends am ong cbs’ 18,000 students from more than 80 countries. See what we look like and how we work on cbs.dk Download free ebooks at bookboon.com 41 Balanced Scorecard Approach to Performance Evaluation Tools for Enterprise Performance Evaluation 5. Balanced Scorecard Approach to Performance Evaluation Thus far, this chapter has focused on budgets, standards, and variances to assess entity performance. However, other nonfinancial metrics should also be employed in performance evaluation. This is sometimes referred to as maintaining a balanced scorecard, meaning that performance assessment should take a holistic approach. Long-term business success will not be achieved if the focus is only on near-term financial outcomes. At the same time, financial goals are not abandoned; the goal is to achieve balance. With the balanced scorecard approach, an array of performance measurements are developed...
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This note was uploaded on 06/07/2013 for the course BA 201 taught by Professor Cuongvu during the Fall '13 term at RMIT Vietnam.

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