All 38 Variance Analysis questions
More in Variance Analysis
What is the difference between the sales volume variance valued at contribution versus profit? What is the materials mix and yield variance? What are planning and operational variances? How can variances be interdependent, and why does that matter? How does variance analysis differ under marginal versus absorption costing? How do you calculate the fixed overhead capacity and efficiency variances? How do you interpret an operating statement under marginal costing? How do you compute and use a market size and market share variance? How do you reconcile standard cost of actual production to actual cost? How can variance analysis mislead in a JIT or lean environment?
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Budgeting & Forecasting › Variance Analysis

What are the limitations and criticisms of variance analysis and standard costing?

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Criticisms include: standards quickly become outdated in dynamic environments; it can encourage a short-term, cost-focused, blame culture; it suits stable, repetitive manufacturing more than modern flexible/service operations; it may conflict with continuous-improvement and TQM philosophies; and variances are historical, reported after the fact. These drive interest in alternatives and revised (planning/operational) approaches.
Real-world example In a fast-changing production setting, static standards make variances misleading and demotivating.

Common follow-ups: Why is standard costing less suited to modern environments? | How does it conflict with TQM?

The Budgeting Process Rolling Forecasts Variance Analysis
All 38 Variance Analysis questions