Business Administration Research project Topic Chapter 1-5 titled – The Importance of Variance Analysis in A Manufacturing Company .
The success of a business organization very much depends on its decision making, planning and control by the management in charge of it.
Management themselves also depend on some relevant, good, accurate, clearly purposes. This information is also expected to be cost effective (i.e. the cost of determining the information must not be in excess of the benefit to be derived from it).
It is conceived that any good functional organization management should be interested in the business performance evaluation and appraisal so that inherent variances are easily identified for decision making to plan and control the organization efficiently.
However, analysis of variances in an organization say manufacturing company as a topic is a way to resolve the fore mentioned inherent problem.
- HISTORICAL BACKGROUND OF THE STUDY
Variance analysis is an important area of study in manufacturing company for so many years back; there have problems of variance in the manufacturing companies, which have then become fundamental.
The variances are usually arrived at due to the inadequacy of the company management to set up suitable standard or lack of adequate and relevant information.
To break the jinx of coming across variances in the manufacturing companies, such variances arrived at initially have to be analyzed and process as corrective measure to guide against any future variances.
- STATEMENT OF PROBLEMS
Usually, a work of this nature is always a time consuming one, this is not an exception. For the purpose of this research work, the following are the statement of problems.
- To analyze the purpose and usefulness of variance analysis.
- To examine the various type of variances in manufacturing company.
- To know the extent at which variance analysis is used in a typical manufacturing company.
- To examine the variance analysis used in control process.
- To evaluate the modern techniques for setting standards.
- To identify how variance analysis are used in planning process.
- To make recommendation for its proper use in all organization concerned.
- To study the inability of management to ensure that they monitor the set standards.
- To investigate the inability of management to set an acceptable standard level of variance.
- OBJECTIVES OF THE STUDY
The main purpose of this study is to have a clear understanding, on objectives like (1) to analyze the purpose and usefulness of variance analysis.
- SIGNIFICANCE OF THE STUDY
The importance of variance analysis in an organization cannot be over emphasized they are:
- Vital and reliable information are needed for performance appraisal and the evaluation of the organization that required variance analysis.
- Aid management to know the extent of deviation from the plan and what action to take.
- Helps to evaluate managerial fulfillment of corporate objectives.
- It also assists in making budget and setting proper standards so as to enhance the achievement and maintaining of a desired state of the organization.
- Is part of the planning cycle i.e. to compare results with the plan and identify differences and their causes.