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Several tools are available to managers to assist them in evaluating organizational performance, one of them being variance analysis. Variance analysis compares actual costs and quantities with standard costs and quantities. The results from a variance analysis are important for helping managers control costs (price variances) and identify areas where organizational performance and efficiency can be improved (quantity variances). In this Discussion, you will use an example from your professional career to consider the role of variance analysis in the decision-making processes for an organization.
RESOURCES
Be sure to review the Learning Resources before completing this activity.
Click the weekly resources link to access the resources.
To prepare for this Discussion:
- Consider the role of variance analysis in decision making and how understanding variances, both favorable and unfavorable, might help contribute to improved organizational efficiency.
- Identify an example from your professional career in which both highly favorable and unfavorable variances occurred.
BY DAY 3
Post an explanation of the role of variance analysis in managerial decision making, to include the following:
- Describe an example from your professional career in which both highly favorable and unfavorable variances occurred.
- Identify what stakeholders were most affected by these variances.
- Explain how understanding these variances could have helped you as a manager in this situation to make better decisions.
Refer to the Week 4 Discussion Rubric for specific grading elements and criteria. Your Instructor will use this grading rubric to assess your work.
Read some of your colleagues’ postings.
BY DAY 5
Respond to two or more of your colleagues’ posts in one or more of the following ways:
- Compare the example of variances and/or stakeholders impacted that your colleague described to your own professional experience.
- Based on your colleague’s explanation of how understanding the variances in their situation could have helped them make better decisions as a manager, provide a key takeaway that you could apply to your own managerial decision making in the future.
Return to this Discussion in a few days to read the responses to your initial posting. Note what you have learned or any insights you have gained as a result of the comments your colleagues made.
