ACCA PM · Chapter 12 · Question 10 of 12
Which of the following is a recognised problem with separating variances into planning and operational elements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Managers may try to claim that adverse variances are due to planning errors outside their control
Explanation
Revised standards are set with hindsight and involve judgement, so managers have an incentive to argue that poor results are planning (uncontrollable) issues. Establishing a realistic revised standard can also be time-consuming. Planning and operational analysis can be applied to sales, material, labour and overhead variances.
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