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Ques – Which of the following statement(s) is/are true regarding planning and operational
variances?
(1) Planning and operational variances are calculated when it is necessary to assess a
manager on results that are within his/her control.
(2) Revised standards are required because variances may arise partly due to an
unrealistic budget, and not solely due to operational factors.
A 1 only
B 2 only
C Neither 1 nor 2
D Both 1 and 2
As per answer it is D?
My understanding is that we assess the managers performance only by operational variance as planning variance is uncontrollable for them ? right so shouldnt it just be B ?We assess the managers on the operational variances and therefore we need to analyse the total variance into the planning and operational variances. Statement 1 is true.
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