Why might an analyst examining variances in the

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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
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7-12Why might an analyst examining variances in the production area look beyond that busi-ness function for explanations of those variances?7-2
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Applied Calculus for the Managerial, Life, and Social Sciences
The document you are viewing contains questions related to this textbook.
Chapter 2 / Exercise 61
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
7-13Comment on the following statement made by a plant manager: “Meetings with my plantaccountant are frustrating. All he wants to do is pin the blame on someone for the many vari-ances he reports.”The plant supervisor likely has good grounds for complaint if the plant accountant puts excessiveemphasis on using variances to pin blame. The key value of variances is to help understand whyactual results differ from budgeted amounts and then to use that knowledge to promote learningand continuous improvement.7-14When inputs are substitutable, how can the direct materials efficiency variance be decom-posed further to obtain useful information?
7-15“Benchmarking against other companies enables a company to identify the lowest-costproducer. This amount should become the performance measure for next year.” Do you agree?

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