Performance Management

Introduction Overhead costs are categorized into fixed and variable costs. Both these costs can change depending on several factors. Depending on the costing method in use, the contribution or profit margins can significantly change with variance in either fixed or variable overheads. Under the Marginal costing method, overhead costs are charged directly to the income […]

Introduction In this article, we will cover in detail about the fixed overhead spending variance. We commonly call The fixed overhead spending variance as fixed overhead expenditure variance or fixed production overhead expenditure variance. Before going further detail, let’s have a look at overview and the basic definition. Business operations require ongoing expenses to produce

Introduction In this article, we will cover in detail for planning and operational variances for materials. We have covered the direct material price variance in previous article. However, in this article, we will go further to planning and operational variances for direct material price as well as planning and operational variances for direct material usage.

Introduction In this article, we will cover in detail of the planning and operational variances for labor. This includes the further breakdown into direct labor rate operational variance, direct labor rate planning variance, direct labor efficiency operational variance and finally direct labor efficiency planning variance. In this article, we will illustrate the detail breakdown of

Introduction In this article, we cover the variable overhead spending variance. This is also called variable production overhead expenditure variance or variable production overhead spending variance. Overhead costs are indirect in nature for product or service and divided into fixed and variables overheads. Variable overheads are linked with products indirectly but change in proportion to

Introduction Sales price variances can occur both in planning and operational forms. The sales price planning variance is often caused due to uncontrollable or external market factors, while Sales Price Operational Variance occur internally. So what is Sales Price Operational Variance? Definition Sales price operational variance can be defined as: “The difference between product units

Introduction Fast paced and dynamic market conditions mean the companies need to stay alert and responsive to the changes. Product sales pricing is one of the most crucial decisions to stay competitive or take the market leader position. Management performs budgeting and planning activities to set a standard sale price per unit for each product.

Overview In this article, we will cover the market size variance or sales volume planning variance and market share variance or sales volume operational variance. This will include the key definition, formula, examples, analysis and interpretation. In addition, the later section also includes the important of sales volume planning and operational variances. Before diving into

Introduction The first and one of the most important elements in an Income Statement is the Sales or revenue of the company. Manufacturing facilities in particular get affected by the volume of production and corresponding sales. Companies always plan a certain volume of product units to sell in period, achieving that target depends on several

Introduction In this article, we will cover the sales price variance analysis. It is sometimes called selling price variance. Variance analysis is one of the key tools in performance management. IT gives management a chance to implement the higher standards and revise the lapses in planning and implementation. Definition In simple terms, the variance can