Thomas A. Carnes
University of Arkansas
Department of Accounting
BADM 204, Sam M. Walton College of Business Administration
Fayetteville, AR 72701
Phone: (501) 575-4117
Fax: (501) 575-4168
E-mail: carnes@comp.uark.edu
I have developed an interactive spreadsheet that allows students to see for themselves how variances are calculated and how changes in price or quantity affect net income. The spreadsheet allows students to change the price or quantity used in production for either material or labor. Once the student enters the change, the new variances and total expenses are calculated automatically. Variances appear in red if negative and in blue if positive. This allows students to experiment with different changes and quickly see how the changes affect variances and net income.
Students are able to take a self-paced approach to the study of variance analysis. They can see how one change -- such as an increase in labor hours needed -- will affect total expenses if all other factors are held constant. They also can determine how multiple changes will interact to affect total expenses. For example, they can calculate how much they need to cut hourly labor costs to hold total expenses constant if labor hours have increased.
It serves as an effective introduction to variance analysis, a topic all accountants must understand, and it also introduces them to the power of spreadsheets as a tool for analysis.
None available at this time except the actual spreadsheet site.