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What are the pre-requisites for reporting the variances effectively?
The pre-requisites for reporting the variances effectively are as follows:
- Structure of the Organisation should be clearly defined.
- Cost centre should be clearly defined.
- Reports showing the variance should be simple and clear to understand.
- The computation and analysis of the variance should be accurate.
- Efforts should be made in order to differentiate between controllable variance and non controllable variance.
- The reports should contain a comparison of variance with the planned results.
- The format and contents of the reports should be according the level of management to whom reports are being presented.
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