Author:

Margaret N. Boldt, Ph.D., CMA, College of Business, Southeastern Louisiana University

This paper presents an alternative way of presenting cost variance calculations that helps students correctly solve typical cost variance problems and focus on the size of the variances rather than the labels of ‘favorable’ and ‘unfavorable’.

This method uses three modifications to traditional methods of instruction to avoid some common pitfalls that may lead students to incorrectly perceive unfavorable variances as negative and needing attention while favorable variances are positive and do not need attention. The three suggested modifications to traditional instruction are easily implemented with any existing course materials.

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