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Responsibility for Variances In accounting, responsibility is attached to whoever has the best information regarding a situation. In variance investigation, the manager starts first with the department that knows the most about the issues surrounding the variance. For example, the role of the Purchasing Department is to purchase materials and, as a result, it is responsible for any direct materials price variance. This department is most familiar with the reasons for any price difference from standard. The production supervisor is most familiar with the reasons for labor efficiency or inefficiency. This does not mean that these departments are "to blame" for the variance. Recall that variances are tagged "favorable" or "unfavorable" but that these labels do not mean "good" or "bad." Instead, they just indicate the direction of the variance from standard. In investigating the materials price variance, a manager would go first to the In investigating the materials usage variance, a manager would go first to the In investigating the labor rate variance, a manager would go first to the In investigating the labor efficiency variance, a manager would go first to the A large unfavorable materials usage variance coupled with a large favorable materials price variance could mean A large unfavorable labor rate variance coupled with a large favorable labor efficiency In the above case, who is responsible? variance could mean higher paid workers left and were replaced with less experienced, lower paid, workers view each item to see if one was particularly higher or lower than industrial engineers developed a more efficient production process Jan standard receiving costs would send the manager to the supervisor the manager to the Engineering Department. it was flu season and many workers were out sick lower paid workers left and were replaced with higher paid, more experienced, workers less expensive, lower quality materials were purchased. less expensive, higher quality materials were purchased. more expensive, difficult to work with materials were purchased. more expensive, easier to work with materials were purchased. Human Resources Department Production supervisor Purchasing Department