An investigation on the effects of using variance analysis as a tool for financial performance. A case of manufacturing companies in Zimbabwe
- Author
- Nyamarima, Yolanda C.
- Title
- An investigation on the effects of using variance analysis as a tool for financial performance. A case of manufacturing companies in Zimbabwe
- Abstract
-
The research was done to investigate effect of variance analysis on financial performance of manufacturing companies in Zimbabwe. The study was motivated by how various companies are using the variances in production of goods to measure their financial health. The study mainly focused on three objectives, which are the effect of material cost variance on return on assets, the influence of labor cost variance on return on assets and the effects of overhead cost variance on return on assets. The study used a causal research design since it’s suitable for studying the influence of variance analysis on financial performance because it enables the creation of a cause-and-effect connection between two variables.. The population of the study consisted of 37 manufacturing companies listed on the Zimbabwe stock exchange. The data was collected from the annual financial reports of the five (5) manufacturing companies sampled for the investigation for the periods 2016-2022.Primary data was collected from the five companies using interviews, 15 personnel from management were interviewed. The measures of variance analysis were proxied with overhead cost variance, labor cost variance and material cost variance. Panel data was used which consists of 101 observations analyzed using multiple regression model. Computed hypothesis results shows that there is a significant positive relationship between direct material cost and return on assets with a coefficient of 0.524 4 (t -value=4.229) (p=0.025) while labor cost variance has positive effect on return on asset with a coefficient of 0.048 (t- value = 4.271) (p= 0.000) and overhead cost variance has positive substantial effect on return on asset with a coefficient of 0.014 (p=0.001 )of listed manufacturing companies in Zimbabwe. Qualitative results were analyzed using thematic data analysis tool, which both concluded that that is a strong positive relation between the use of variance analysis and financial performance.
- Date
- 2023
- Publisher
- BUSE
- Keywords
- Financial performance
- Financial health
- Supervisor
- N/A
- Item sets
- Department of Accountancy