Planning and operational budgets
You'll learn how to distinguish between planning and operational variances to fairly assess manager performance. In this lesson, we break down how planning variances capture uncontrollable external factors (like market changes or new legislation), while operational variances reflect what managers can actually control.
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In this lesson
- 0:00 Section Four: Planning and Operational Budgets
- 0:04 Assigning Accountability Through Budgets
- 0:22 Planning Variances vs Operational Variances
- 1:51 Material Variances: Planning and Operational
- 3:08 Material Price Variance: Worked Example
About this lesson
You'll see how to recalculate variances using revised standards rather than original budgets, and work through a practical example calculating material price operational variances. This distinction is essential for Performance Management and Advanced Performance Management papers, ensuring accountability is assigned accurately across your organisation.
Duration: 5m
Transcript
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