Determining Which Cost Variances to Investigate
At Jerry's Ice Cream or any other company, each budget line item could have an associated variance. The question becomes which variances should be investigated. As a decision-maker, you have limited resources, and you should allocate them to their most productive use. Every investigation consumes resources and has a direct expense associated with it. All managers must be judicious in selecting and investigating variances. Let's return to Jerry's Ice Cream to determine which variance you would track and examine.
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