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Managerial Accounting For Dummies by Mark P. Holtzman

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Chapter 17

Variance Analysis: To Tell the Truth

In This Chapter

arrow Understanding and setting standard costs

arrow Figuring out direct materials prices and direct labor rates

arrow Using formulas to compute variances

arrow Exploiting a short cut for calculating direct material and direct labor variances

arrow Identifying variances that require further investigation

When things don’t go according to plan, inevitably you’re left asking “Why?” To find the answer, examine the factors under your control. For example, I don’t like to diet. As an accountant, I should enjoy counting calories. But I don’t. I don’t like exercise either. That said, checking my weight often leaves me asking “Why?” Inevitably, I thought I was so careful this week. Why did I gain three pounds? It all comes down to three factors under my control:

check.png What I eat and drink

How much I eat and drink

How much I exercise

Examining each of these factors ...

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