ACCA Applied Skills · Performance Management · Planning and operational variances
Which of the following labour variances would most appropriately be classified as a planning variance rather than an operational variance?
The industry-wide wage agreement is a planning variance. It was external, outside management's control, and made the original standard rate unrealistic. Idle time, slow working and unnecessary overtime stem from internal decisions or behaviour, so they are operational variances for which managers can be held accountable.
- AAn industry-wide wage agreement, reached after the budget was set, raised hourly pay for all employersCorrect
- BPoor scheduling by a supervisor left workers idle for several hours
- CWorkers took longer than standard because of low motivation
- DUnnecessary overtime was paid because of the production manager's poor planning of shifts
Explanation
Planning variances arise from uncontrollable external factors that make the original standard unrealistic, such as an industry-wide pay rise after budgeting. The other options arise from management or worker actions within the period, so they are operational variances and are controllable by the managers responsible.
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