Explain the meaning and relevance of interdependence of variances when reporting to managers.
【参考答案及解析】
Interdependence of variances is the term used to describe the situation when there is a single cause of a number of variances. For example, the use of a higher grade of labour than was anticipated is likely to cause an adverse labour rate variance, a favourable labour efficiency variance, and possibly a favourable material usage variance (due to more experience of working with materials). It is important that when variances are reported, the possibility that some of them may have a common cause should be acknowledged, and managers encouraged to work together for the benefit of the organisation.
Interdependence of variances is the term used to describe the situation when there is a single cause of a number of variances. For example, the use of a higher grade of labour than was anticipated is likely to cause an adverse labour rate variance, a favourable labour efficiency variance, and possibly a favourable material usage variance (due to more experience of working with materials). It is important that when variances are reported, the possibility that some of them may have a common cause should be acknowledged, and managers encouraged to work together for the benefit of the organisation.