ACCT 116 Lecture Notes - Lecture 7: De Havilland Mosquito, Shap, Opata Language

• School: Drexel University
• Department: Accounting
• Course: ACCT 116
• Professor: Jones Kevin

Document Summary

Companies use the variance analysis cycle, to evaluate and improve performance. The cycle begins with the preparation of performance reports in accounting department. These reports highlight variances, which are the and what should have occurred according to the budget. differences between the actual results. The emphasis should be on highlighting superior and unsatisfactory results, finding the root causes of these outcomes, and then replicating the sources of superior achievement and eliminating the sources of unsatisfactory performance. The variance analysis cycle should not be used to assign blame for poor performance. Managers frequently use the concept of management by exception in conjunction with the variance analysis cycle. Management by exception is a management system that compares actual results to a budget so that significant deviations can be flagged as exceptions and investigated further. This approach enables managers to focus on the most important variances while bypassing trivial discrepancies between the budget and actual results.