Term Paper-would you consider buffering the standard so that under most circumstances there would a favorable variance and in the unlikely event prices increased they would still be covered by the standard?
a price variance on fuel could result in a favorable or unfavorable variance to standard costs without any good or bad performance by the team.
However, an unfavorable variance still results on a negative impact on profit and, it does not matter why prices increased compare to standard, it is still bad news to the company.
For a commodity with a volatile price, would you consider buffering the standard so that under most circumstances there would a favorable variance and in the unlikely event prices increased they would still be covered by the standard?
