Greenwich Engineering Essay Example | Topics and Well Written Essays - 1500 words

Greenwich Engineering - Essay Example This involves the identification of variances and also the controllability of those variances which are unfavourable. (Horngren et al, 2002) Identifying controllable variances is a complex process as there will be a multiplicity of factors operating on the variance. Variances often interact with each other making the job of the manager in identifying the controllability difficult. For instance a labour efficiency variance may be the result of the problems caused by labour as well as the problems encountered with machinery and equipments. The poor quality of materials used may also lead lesser efficiency in the labour. Apart from this in some cases the mangers tend to trade off variances, purposely incurring an unfavourable variance that is more than offset by favourable variances. (Accounting) The variances being identified under standard costing are too aggregated and setting standards is often a complex process. This makes the standards arrive at a very last stage and hence the standards may not actually be used to control the variances in time. The calculation of variances is often attempted as a post-mortem analysis which is really not useful to the management for planning and control purposes. The variance analysis under the standard costing system focuses on less important items to a large extent. For instance the sta