The Variances Discussed in Chapter 15 (For Manufacturing Overhead)are All

question 74

Essay

The variances discussed in Chapter 15 (for manufacturing overhead)are all components of a short- term financial control system.These variances are calculated using standard manufacturing costs and flexible budgets.As was argued in the text (both in Chapter 15 and elsewhere)a financial control system is but part of a more comprehensive management accounting and control system.
Required: (a)What are the primary limitations of short-run financial control measures?
(b)How can a short-run financial control system be expanded to become a more comprehensive management accounting and control system? Discuss,in at least some detail,how and why you would expand the system in an attempt to provide management with more useful information.
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Definitions:

Adaptation-Level

A theory suggesting that people adapt to new stimuli and events, eventually perceiving them as normal and using this new norm as a baseline for future judgments.

Emotional Satisfaction

A state of contentment and fulfillment derived from emotional experiences.

External Locus

A belief that one's life events are primarily due to external forces or situations beyond one's control.

Locus of Control

A psychological concept referring to the extent to which individuals believe they have power over events in their lives.