Acc389DQs

When should variances be investigated?  Each company is different; they will each have their own standards as to when variances should be investigated.

Who should be responsible for correcting a negative variance? Why? Negative variances are also known as unfavorable variances. As to who is responsible for correcting the unfavorable variance depends on where the variance occurred.  The responsible party could be a department or an individual like a manager.  If the variance occurred with overhead then the production department would be responsible to correct it.

What are some factors that can lead to variances?  There are many internal and external factors that can lead to variances.  Unfavorable variances can be contributed to cost of labor, the rise is cost of materials, and cost of repair, poor employee training and maintenance of equipment.  Factors that can lead to favorable variances are when the company has efficiencies in manufacturing, labor and material costs.  When favorable variances have to be looked over to make sure the favorable result was not because of sacrificed quality.

How can variances be corrected? Determining what is causing the variances and making the proper decisions can correct variances. 
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