A Production Manager Was Recently Given a Performance Report That

question 44

Essay

A production manager was recently given a performance report that showed a sizable unfavorable variable-overhead efficiency variance. The manager was puzzled as to how the department could be inefficient in the use/incurrence of this cost.
Required:
Briefly explain the nature of this variance to the manager. Does the variance really have much to do with variable overhead efficiencies or inefficiencies? Discuss.

---

Definitions:

Refinement

The process of improving something by making small changes, especially to make it more effective or to enhance its quality.

Neatness

The quality of being clean, tidy, and in order; often associated with personal or environmental organization.

Education

The method of obtaining or providing structured learning, particularly in an educational institution like a school or university.

Intelligence

The ability to learn from experience, adapt to new situations, understand and handle abstract concepts, and use knowledge to manipulate one's environment.