Managers often use variance analysis in employee performance evaluations for the following two attributeseffectiveness and efficiency. Variance analysis alerts management to whether the organization is achieving its short-term financial goals. For companies to reduce variances and improve financial performance, it is first necessary to identify and report the causes of the variance and how well the variance can be controlled.

Read the following scenario and respond to the questions following in your initial discussion post:

During the last quarter of FuturePrint's fiscal year, Jean Day, the CFO, calculated the production volume variance for the quarter, noting a significant favorable variance resulting from increased production. In fact, although there was no change in the sales forecast for the year, production had increased 30% for the quarter. Concerned that the company may now have a backlog of inventory to manage, Day met with Gerry Rick, the plant supervisor.

Mr. Rick indicated that he had directed the production department to increase manufacturing for the period. He rationalized that the increased production was due to his prediction that companies would have excess cash in their budgets at year end to replace existing printers with new higher tech printers such as the ones made by FuturePrint. Day was not satisfied that this was the complete story.

Question

Does this information make you wonder if Gerry is conducting a form of insider trading?