Variances: the three step method
Article Abstract:
Variance analysis is an important part of the accounting syllabus. One of its key applications is in financial planning and control where it is needed to create reconciliation statements. It is particularly useful in the computation of operating and planning variances, an area of accountancy in which students often encounter difficulties. To assist such students, several problems involving the computation of variances are provided. The problems focus on the differences between operating and planning variances and also illustrate how mix and yield variances should be treated. After the solutions to the problems have been explained, a simple three-step method for computing variances is proposed. This method involves making the revised budget; computing operating variances by matching actual results with the revised budget; and using the planning variance to balance the revised budget profit.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1995
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How to stop your clients going out of business
Article Abstract:
Financial survival for many firms is a tenuous situation that necessitates constant analysis and correction to forestall unexpected financial disasters. Accounting firms can help prevent their clients from going bankrupt by adopting an analysis technique knows as commercial awareness and a sense of timing (CAST). CAST can be used in all the stages of a business' life cycle, including initial planning and start-up. CAST can also be used successfully for self-assessment during the establishment period, to find solutions to financial disasters requiring intensive care, and to aid in reconstruction if necessary.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1991
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