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The tool described is most appropriate for a first-level undergraduate course in cost/management accounting, which is typically taken in the second year of a post-secondary business program.

This chapter discusses a method for teaching a challenging topic within cost/management accounting, which is calculating variances for expenses. The proposed methodology focuses on a “common sense” understanding of variances as differences between budgeted and actual results. The new approach (i) uses a golfing analogy as a frame of reference, (ii) includes questions to assist in the analysis, and (iii) provides a table to organize and calculate variances. The variances examined include eight common expense-side variances used by manufacturers: material price and efficiency variances; labor price and efficiency variances; variable overhead spending and efficiency variances and fixed overhead spending and production volume variances.

By using this tool, students will be able to understand how and why variances are calculated. It will also provide them with better insight into appropriate corrective action that will address deviation from plans.

I provide a template to facilitate the calculation of variances, along with a list of questions that will guide students in their analysis. I also give an application of the suggested approach, using a standard textbook problem.

Presents a case study demonstrating financial statement ratio analysis (FSRA). This analysis matches company to industry data and builds sales forecasting models. FSRA imputes forecast standards of sales and costs, and applies them to a budgeted financial statement variance analysis for the EE (electronic and electrical) industry. Develops the concept of industry base standards, integrating them into the more traditional statistical and accounting concepts of quality control standards. Provides an implementation example, and reviews possible improvements to the current methodology and approach. Uses a similar methodology to forecast the stock market value with some exceptions. Models sales and costs of an individual company and an industry based largely on aggregate industry databases. For this purpose, uses a multivariate linear trend regression analysis for the sales forecasting model. Defines and tests related hypotheses and evaluates their significance and confidence levels. For an illustration uses the EE industry and the APM company. Also demonstrates a microcomputer‐based FSRA software that speeds, facilitates, and helps to accomplish the stated objectives. The FSRA software uses industry financial statement databases, computes financial ratios and builds forecasting models.

The purpose of this paper is to present a new optimisation approach for product variance from the purchasing perspective.

The research is based on a case study of a collaboration with a global acting automotive Tier 1 supplier, who produces steering systems for cars and commercial vehicles. A total of 116 different variants of three components of a car automotive steering system were analysed and evaluated. The data were gathered from 13 sub-suppliers for three different types of a steering system.

Unnecessary time, money, quality and technology can be saved through a greater understanding of such product variances. The results of the case study lead to a general method to optimise existing product variance and present cost improvements and a new key performance indicator to manage product variance out of the purchasing department.

The research is based on a purchasing case study at a Tier 1 supplier of the automotive branch. The approach can be used for other company departments, e.g. logistics and for different industries than automotive.

A company can be successful and competitive when it meets the customer needs with a maximum on satisfaction without generating of waste. Unnecessary existing product variance is a kind of waste. The insights of this paper support the operative user and the strategic company management to reduce and improve unnecessary variance in different sections.

The structured analysis of product variance from the purchasing perspective and the key performance indicator “variance share” are new to company management. The research focuses on the management of existing variance out of the purchasing department which is a segment that has received limited academic attention in research to date.

Introduction Properly performed management accounting variance analyses frequently generate insight by management that helps to identify factors contributing to a poorer (or better) than expected performance, and to pinpoint persons or circumstances responsible for a variance. On the other hand, incorrect or inadequate evaluations are often dysfunctional to management. The wrong problem areas may be exposed by an incorrect evaluation, valuable time and expensive effort may be wasted in analysing the wrong problems, and improper actions might be enacted that would tend to hasten an already deteriorating situation.

Literature, spanning industrial organization and strategic management disciplines, uses variance decomposition to understand the relative importance of firm, industry and business group effects in shaping profitability variations. Some literature analyzes firm profitability under transition to liberalization. Previous research has taken a static before-and-after view on institutional change. This paper aims to focus on the dynamic process of liberalization in India, analyzing how different institutional regime changes alter firm behavior leading to changes in profitability patterns.

Based on a panel data set of several thousand Indian firms, spanning the 26-year period between 1980-1981 and 2005-2006, the authors determine the relative importance of firm, industry and business group effects in explaining manufacturing firms’ profitability variances across different institutional phases. The authors evaluate three propositions that help assess transition dynamics between phases. They determine the quantum of catch-up or falling behind by firms.

Different industries emerge as profitability leaders, as the economy progresses through different liberalization phases. Business groups that have been more effective in resource appropriation, rent-seeking, politician management and non-market activities in a controlled regime are replaced as profit leaders by those that, in a free-market economy, can be capable of intra-business resource allocation tasks and leveraging corporate capabilities.

The approach demonstrates how to analyze the underlying detailed structure of firm-level data, and performance outcomes, to derive nuanced interpretation of factors giving rise to the effects that explain profitability variances, and how to assess the way these effects behave over time. The dynamic evidence-based approach highlights what factors matter, where, when and why, in influencing profitability variances, which are a key dimension of industrial and economic performance.

A Process Model During the last five years, American businesses have increasingly accepted the notion that product quality is necessary for them to compete in today′s world markets. Product quality, in the context here, can be defined by an agreed set of standards and tolerance limits between the firm and its customers. Quality is achieved through the successful creation of form, possession, time, place, and quantity utilities for the firm′s products. Control must be implemented in order to ensure that these utilities are created to meet the standards and tolerance limits agreed upon by the firm and its customers. The purpose of exercising control is to ensure that desired results are attained from an activity or process. As such, it is important to exercise control over the logistics activities to make sure that time, place, and quantity utilities are created in accordance with customer needs. The purpose of this monograph is to present a rather comprehensive discussion of the concept of control. Specific control concepts presented include a discussion of the link between control and quality, the development of the characteristics of control and levels of sophistication of control, the presentation of an eclectic process control model, and suggestions to managers on how to implement the control process over logistics activities.

In the 1970s and early 1980s several studies recommended using a framework based on a 1977 Hulbert and Toy model for analyzing marketing variances. Proposes adaptation of the model to control the processes of sales planning and sales performance, not the performance of individuals as originally advocated ten to 15 years ago. Emphasizes process improvement, rather than people measurement, consistent with the current quality movement that so many firms have embraced. Implementation of the Hulbert and Toy model requires generation of a revised plan. By comparing the original plan, the revised plan, and actual results, management can identify where improvements in the planning processes may be achieved. The objective is to reduce variation between actual and planned sales. Suggests that reduced planning variances yield a higher quality plan and a more harmonious operation.

Examining multilevel effects of financial and social performance of microfinance institutions (MFIs), the authors aim to investigate microfinance mission drift from the trend effect. The authors also seek to move the literature forward by decomposing the performance variance at different levels and examining whether and how much each level of analysis matters.

Growth curve modeling and variance decomposition analysis were conducted using a dataset consisting of 17,953 observations of 2,902 microfinance institutions in 122 countries from 1999 to 2017.

The study's result shows no evidence of mission drift in the microfinance industry. While MFIs improve their economic returns, they also increase the depth of outreach. In addition, firm-level heterogeneity is the dominant effect which explains 44% of the variance in microfinance financial performance (ROA) and 39% of the variance in social performance (Depth of outreach). The country-level is more critical in explaining financial performance (ROA) than social performance (Depth of outreach), accounting for 11 and 32% of the total variance, respectively. In particular, the interplay between the country-level and organizational-category level accounts for 9 and 11% of the total variance in financial performance (ROA) and social performance (Depth of outreach), respectively.

This study’s multilevel analysis of microfinance performances moves the literature forward by responding to the debate on microfinance mission drift and providing a comprehensive overview of both social and financial performance. By focusing on the trend effect, the result of our models shows that MFIs improve both financial and social performance to fulfill dual missions. The microfinance business model becomes sustainable over time. The study's results of country effect and its interaction effect with different organizational categories reveal the prominence of a good policy design on MFI's mission fulfillment.

Smart card-based E-payment systems are receiving increasing attention as the number of implementations is witnessed on the rise globally. Understanding of user adoption behavior of E-payment systems that employ smart card technology becomes a research area that is of particular value and interest to both IS researchers and professionals. However, research interest focuses mostly on why a smart card-based E-payment system results in a failure or how the system could have grown into a success. This signals the fact that researchers have not had much opportunity to critically review a smart card-based E-payment system that has gained wide support and overcome the hurdle of critical mass adoption. The Octopus in Hong Kong has provided a rare opportunity for investigating smart card-based E-payment system because of its unprecedented success. This research seeks to thoroughly analyze the Octopus from technology adoption behavior perspectives.

Cultural impacts on adoption behavior are one of the key areas that this research posits to investigate. Since the present research is conducted in Hong Kong where a majority of population is Chinese ethnicity and yet is westernized in a number of aspects, assuming that users in Hong Kong are characterized by eastern or western culture is less useful. Explicit cultural characteristics at individual level are tapped into here instead of applying generalization of cultural beliefs to users to more accurately reflect cultural bias. In this vein, the technology acceptance model (TAM) is adapted, extended, and tested for its applicability cross-culturally in Hong Kong on the Octopus. Four cultural dimensions developed by Hofstede are included in this study, namely uncertainty avoidance, masculinity, individualism, and Confucian Dynamism (long-term orientation), to explore their influence on usage behavior through the mediation of perceived usefulness.

TAM is also integrated with the innovation diffusion theory (IDT) to borrow two constructs in relation to innovative characteristics, namely relative advantage and compatibility, in order to enhance the explanatory power of the proposed research model. Besides, the normative accountability of the research model is strengthened by embracing two social influences, namely subjective norm and image. As the last antecedent to perceived usefulness, prior experience serves to bring in the time variation factor to allow level of prior experience to exert both direct and moderating effects on perceived usefulness.

The resulting research model is analyzed by partial least squares (PLS)-based Structural Equation Modeling (SEM) approach. The research findings reveal that all cultural dimensions demonstrate direct effect on perceived usefulness though the influence of uncertainty avoidance is found marginally significant. Other constructs on innovative characteristics and social influences are validated to be significant as hypothesized. Prior experience does indeed significantly moderate the two influences that perceived usefulness receives from relative advantage and compatibility, respectively. The research model has demonstrated convincing explanatory power and so may be employed for further studies in other contexts. In particular, cultural effects play a key role in contributing to the uniqueness of the model, enabling it to be an effective tool to help critically understand increasingly internationalized IS system development and implementation efforts. This research also suggests several practical implications in view of the findings that could better inform managerial decisions for designing, implementing, or promoting smart card-based E-payment system.

The purpose of this paper is to present a review of variance decomposition studies of firm performance and the theoretical foundations that served as the antecedents and promptings for this stream of research. Known collectively as “variance decomposition literature,” these studies use variance decomposition techniques to partition firm performance into various classes of effects in a bid to unveil the relative importance of factors responsible for firm performance variance.

A review of papers published in SCOPUS and institute for scientific information indexed journals was conducted.

The study found that firm, industry, corporate, business group and country effects are the major effects included in most extant studies. However, of all effects, firm effects remain the dominant and most important impact on firm performance. The effects that affect firm performance are also interdependent.

Consequently, the decisions of managers in firms are still the most important element in helping the firm to navigate industry and contextual factors, especially during periods of recession.

From the review, research gaps were identified and suggestions for future research provided. There is still much to learn from variance decomposition literature in an age of new business models, unprecedented start-up firms and from developing and emerging market countries.