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Management Accounting Scenarios and Applications
Finance & Accounting
Pages 4 (1004 words)
Email 1: In response to Andrew’s email, the following strategy is advised to make a control over the sales expenses: Budgeting An effective way of estimating, controlling and monitoring, budgeting is the most preferred as well as an effective tool that can assist the departmental heads.
In this way, a proper mechanism can be developed which can easily assist the departmental head regarding the cost patterns (Drury, 2006). Variance Analysis Variance Analysis is the next tool which can be used by the departmental heads after the incurrence of actual costs (Drury, 2006). This tool supports the departmental managers as to identify the cost which is actually representing more deviations from the estimated/budgeted/standard cost. Once the cost is identified to have shown deviations, proper investigations should be conducted as to find out the causes of the deviations of that cost. The variance can be either favorable or adverse; however, the departmental heads should investigate both types of variances because at times the favorable variances occur due to using substandard raw materials or other similar issues. By utilizing the above mentioned tools, the departmental heads can easily trace as well as monitor and control the cost patterns of their department. ...
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