Discussion question #3 you have just finished preparing a volume
Upon first glance, the reported variance of $38,900 favorable compared to budget seems quite positive as it indicates that the organization is on track to meet its financial goals for the fiscal year. However, upon further analysis this figure turns out to be inaccurate and actually comes in at a much larger deficit of $85,400 ($23,650 of favorable labor rate variance and $109,050 of unfavorable efficiency variance). This discrepancy highlights how important it is to investigate variances thoroughly in order to gain an accurate picture of performance.
Given that this report represents results for the final month of the fiscal year makes this situation even more concerning as any potential solutions will only be able to have limited impact at best. To address this issue quickly I would recommend looking into ways in which operational efficiency can be improved by adjusting staffing levels or introducing new processes or technology where applicable while also making sure management teams are aware of their responsibilities with regards to cost control.
As such I believe it is important for organizations not only keep track of key performance indicators (KPIs) but also pay special attention when analyzing discrepancies between actual results versus expectations. Doing so allows businesses stay ahead in terms of identifying areas where improvements may need to be made and thus reducing potential issues before they become major problems down the road providing greater assurance for long-term success and sustainability.