Example Ltd is a manufacturer. Which of the following is an example of the control function in management accounting?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Question 1.1
Example Ltd is a manufacturer. Which of the following is an example of the control function in
- Setting production targets for new product models.
- Awarding bonuses to top performing managers.
- Developing corrective actions in response to lower than expected production levels.
- Pursuing legal actions against patent infringement.
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