ON THE MATHEMATICS OF VARIANCE ANALYSIS.
This article focuses on the "mathematics" of accounting variance analysis. It seems that the managerial significance of accounting data is a rather controversial matter and consequently it should not be left completely to the imagination of the reader. The purpose of this note is to suggest an alternative, and what is believed to be a simpler way of getting the overhead variances and then point out some of the significance of the results. One of the most striking features of present accounting literature may be said to lie in the growing interest paid to the mathematics of variance analysis. This development began in 1953 when Gilbert Amerman published his very famous article on the subject. The variation analysis may be easily tied to an effective budgetary control system by comparing the standard and actual costs of a period with the corresponding budgeted costs. On these lines it is possible to discern the influence that important activity and production mix variations had on the direct materials and labor costs. The budget variance is defined by the difference between the actual costs of the period under investigation and the flexible budget allowance for the actual hours worked.
- DOI
- 10.2308/tar-7104444
- Volume
- 38 (3)
- Pages
- 528-533
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref