1. CHAPTER 12
Planning and operational variances
谢琳 程琳 邬琪

2. LIST 1. Reasons for revising a budget or standard cost
2. Planning and operational variances
3. Calculation
4. The value
5. Behavioral aspect of variance

3. Reasons
Traditionally when comparing standards to actual results the comparison has suffered from the time delay between setting the standard and the occurrence of the actual results. So the difference between standard and actual may arise solely due to an ① unrealistic budget and not due to ②operational factors.

4. Planning variances Operational variances Original budget Revised
Actual
Planning
variances
Operational
variances
Uncontrollable
Controllable

5. Market share and market size variances
Calculation

6. 根据market size制定budget
Market size variance
Sales volume planning variance
Manager 不用负责
由经营状况决定market share
Market share variance
Sales volume operational variance
Manager 需要负责

7. Standard contribution per unit 16000÷400= 40/unit
revising

8. Compare the actual with the revised budget——operational variance
Compare the revised budget with the original budget ——planning variance
Standard contribution×sales volume planning variance in units of sales
40×（ ）=4000(A)
Compare the actual with the revised budget——operational variance
Standard contribution×operational sales volume variance in units
40×（ ）=800(F)

9. Compare the actual with the original budget ——sales volume variance
Old method
Compare the actual with the original budget ——sales volume variance
Standard contribution×(Budget volume – Actual volume)
40×（ ）= 3200(A)

10. Notice Material 要同时考虑price和usage的variance ??
Total material cost variance = material price planning variance
+ material usage planning variance
+ material price operational variance

11. The value of planning and operational variances

12. The value of planning and operational variances
Advantages
Highlight variances which are controllable and which are non-controllable.
Managers’ acceptance and motivation
Improve planning and standard-setting processes , more accurate
Reflect the actual performance
Disadvantages
▲Time consuming
▲Difficult to decide the realistic standard
▲Managers resistant the very idea

13. Behavioral aspect of variance in TQM or JIT environment
Total quality management(TQM)
One aspect of TQM is the concept of ’continuous improvement’. Most improvement will be fairly small , but they should be happening all the time.
TQM
Variance
Improve continually
Fixed standard
inconsistent

14. Variances and a JIT environment
JIT management
variance reporting
Aim to
Aim to
Keep these inventories as low as possible
reduce material price variances and production cost variance
inconsistent

15. Thank YOU