Accounting students, analysis of variance, accounting textbooks, managerial accounting


Many accounting students have difficulty with variance analysis. At least part of this difficulty may be caused by the typical presentation of variances in cost/managerial accounting textbooks. Some textbook coverage is disjointed, with brief coverage of flexible budget variances just prior to discussion of manufacturing costs variances. Then, in a much later chapter, sales-variance analysis is covered with little or no reference to the earlier coverage of flexible budget variances. Discussion of input mix and yield variances may be presented in appendices, if covered at all. In addition to disjointed presentations, textbook coverage of variances is often heavily formula driven with no alternative methodology being offered. Although some textbooks provide overview tables (and problems) showing the interrelationships of the variances covered within a particular chapter, comprehensive coverage of variances covered within the entire textbook is lacking. In other words, there is typically no discussion of how the variancescovered in earlier chapters may be incorporated within the variances covered in the later chapters. Thus, many students fail to see the how the numerous variances are related as well as the similarities between the computational aspects of some of the variances.This paper presents two problems that the author utilizes in his Senior/Graduate Level Advanced Cost/ Managerial Accounting course to help students better understand variance analysis. The problems allow students to see the “big picture” without being overly complex. While students are required to calculate all variances typically presented in Cost/Managerial textbooks, they are continuously reminded of the numerous similarities in the computational aspects of these variances. Furthermore, students learn, and understand, alternative methods for computing variances and presenting their solutions.

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