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Hi Dear Tutor, I have a question.
1) a change in employment is legislation which is beyond control of manager
2) customers require higher quality in product design which is also outside control of manager
3) the learning effect for labor being estimated incorrectly in the production budget-why it is considered also outside control of manager ?Operational manager may predict its workforce’s economies of scale -so need explanationThanks in advance
If the learning effect was to change during the period then this would be under the control of the manager and therefore be an operational variance.
However this is not the case here – the learning effect has not changed because the manager performed well (or badly) during the period. It is different simply because the wrong figure had been put in the budget.
Mistakes in the budget are always planning variances. (Operational variances are measuring how well or badly the managers perform during the period.)
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