Every week, you mow the lawn. It usually takes you 20 minutes. This week, it took you a half hour. That 10-minute difference represents an efficiency variance.
In technical terms, the efficiency variance looks at the difference (that is, the variance) between the amount of time or materials that you expect to go into a task and the amount of time or materials that the task actually takes.
You thought the lawn would take 20 minutes to mow. It took 30. There's a 10-minute efficiency variance.
Companies use the efficiency variance to track their production. Each unit of output (say, a bag of cookies or a foot massage) takes up a certain amount of expected resources. The cookies need so much sugar and flour; they need so much of a baker's time and so much time in the oven. If a batch takes more sugar than usual, the company knows something, uh...happened.
The firm will investigate any change from its projected level of labor or material input. The efficiency variance thus allows companies to flag production situations that are unusual or unexpected. They can then either fix the problem or alter their expectations.
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Finance: What is marginal revenue?54 Views
finance a la Shmoop what is marginal revenue well it's that last dollar the [money racing to the finish line]
last sale of a Sunday at baskin-robbins before the year closes at midnight on [ice cream sale]
New Year's Eve it's that last flying car sale
you made it at 11:58 p.m. as the ball was dropping in Manhattan sold it for a [ball floating in space]
hundred grand even felt different from the first car you sold this year why
well because from an accounting perspective it had already been built
shipped Frette painted with that new flying car smell smell yeah and the [flying with air freshener]
revenue had generated was likely meaningfully more profitable or at least
from an accounting perspective then the first car sold why well because so many
of its costs had already been accounted for or paid for or amortized on the [clip board check list]
books that factory that stamped out its last product for the year already had a
year's worth of high use behind it amer tizen the cost of the factory and
everything that went into winning that last marginal dollar of revenue so that
from an accounting perspective to make the first sale of that flying tesla for
a hundred grand well that cost a lawn and company like a billion dollars to
make the millionth test and sell it for a hundred grand well as it was
completely made by the robots a you know cost Elon in company only about 20 grand
like way higher profit margins the key concept to worry about when you think
about marginal revenues is the marginal contribution to profits which that last
dollar brings to the bottom line party anyway we hope you got something out of [dollars meeting together]
this video it's probably one of the last ones not to be made by robots least
around here
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