Variance Analysis in Accounting

MANAGEMENT ACCOUNTING
1
Management Accounting
Student Name
University Name

MANAGEMENT ACCOUNTING
2
Table of Contents
Answer to 1b....................................................................................................................................3
Answer to 4B: Purpose and usefulness of Variance Analysis.........................................................4
Introduction......................................................................................................................................4
Discussion on Purpose and usefulness of Variance Analysis..........................................................4
Conclusion.......................................................................................................................................5
Question 5 A....................................................................................................................................6
Calculation of budget.......................................................................................................................6
Question 5B.....................................................................................................................................6
References........................................................................................................................................8

MANAGEMENT ACCOUNTING
3
Answer to 1b
Relationship between Management Accounting and history
Roman Coliseum can be considered as one of the ancient Amphitheatre build in Rome in
70–80 AD. Modern Management Accounting theory may be useful if this Amphitheatre is rebuilt
again.
Activity based costing may be used to re-built the structure of Roman Coliseum. This is
mainly because it will be a new production process and it will be done in batches. It will also
help to assign manufacturing overhead costs in a proper manner. Activity based costing will also
help to prioritize inventories based on their value and importance (Quinn 2014). Therefore, if
Roman Coliseum is rebuilt, then the inventories needs to be prioritize effectively.
The elements of activity based costing are as follows:-
 Identification of the activities
 Classification of each activity
 Identification of total costs for each given activity
 Cost driver for each given activity
 Analysis of total units of each cost driver
 Identifying the activity rate
 Implementation of usage of each activity
In case of recreating the Roman structure, it is important to manage the costs in an effective
manner. ABC costing will also help to identify activities of costs objects as well as overhead
costs. In addition to this, it will also help in effective decision making process (Scott 2015).