This category covers all aspects of performance management such as budgeting, forecasting, performance measure and performance evaluation.
Introduction Variance analysis is the most important tool for budgeting and control cycles for any company. A total sales variance indicates the under or over sales in comparison to the target sales. Total Sales variance comprises two main parts of Sales Price Variance and Sales Volume Variance. The Sales volume variance can be further analyzed […]
What is The Sales Quantity Variance? Read More »
Introduction Variable overheads account for an important and significant part of the total operating cost for any business, particularly in the manufacturing business. Variable overheads change with operating efficiency and contribute an integral part of total variable cost. The Marginal costing method accounts for the variable overheads to calculate the contribution margin. Variances in planned
Variable Overhead Efficiency Variance Read More »
Introduction In this article, we will cover in detail the Direct Labor Efficiency Variance. Commonly, human capital is called the most precious asset for any organization, skilled labor for manufacturing companies in particular hold an important for efficient manufacturing. For companies producing a large number of different products and utilizing skilled labor, labor efficiency holds
What is Direct Labor Efficiency Variance? Read More »
Introduction In this article, we will cover the Direct Material Price Variance. As you know, variance analysis is one of the key performance management tools, where implemented controls are measured and revised. In any business, continuous improvement and quality management concepts cannot be achieved unless performance measurement is done regularly. Definition Typically, we commonly known
What is Direct Material Price Variance? Read More »
Introduction Budgeting is a key performance management tool and play a vital role in planning, forecasting, performance management and control measure. The most common method of producing a budget is simply printing out the financial statements and make necessary adjustments on historical expenses to account for the inflation as well as adding the project revenues
Types of Budgeting and Budgeting Process Best Practice Read More »
Introduction All businesses prepare budgets; they provide the management useful tools for planning, forecasting, controls, and performance evaluations. The traditional approach towards budgeting is to analyze the past year’s budgets, make adjustments, and prepare the next year’s budgets. The revolutions of new business trends demand robust and flexible approaches. Stakeholders are demanding for extra scrutiny
What is Zero-Based Budgeting (ZBB)? Read More »
Introduction In management accounting, budgeting is a vital part of planning, performance management, and control measures. “A budget is a quantitative plan prepared for a specific time period. It is normally prepared in financial terms and for a time period of one year”. In different types of budgeting techniques, Activity Based Budgeting is defined as:
What is Activity Based Budgeting (ABB)? Read More »
Introduction Every successful project requires detailed attention to every step involved in it. A good management team will start with a pre-plan. Strategic planning requires clear identifications of objectives and goals, in line with the vision and mission statements of the company. One successful approach towards project planning and control is a seven step cycle.
Seven Steps Approach to Planning and Control Cycles Read More »
Introduction Budgeting is a key performance management tool; it sets benchmarks in the operations. It provides valuable analysis for target sets and variance in the results. Different budgeting techniques serve different purposes, for instance; Beyond Budgeting vs Traditional Budgeting. The budgeting process for a company sets an environment of quality management starting from planning, communication,
Beyond Budgeting vs Traditional Budgeting Read More »
Introduction Budgeting and forecasting are two important tools for management in performance planning and measurement. Both of these techniques work similarly, as they observe the historic data, apply changes, and forecast a plan of action for future activities for the management. Uncertainty in macroeconomics or volatility in microeconomics both call for a robust approach, which
Rolling Budget: A Robust Approach to Budgeting Read More »
