The River Beverages case at the end of Chapter 9

The River Beverages case at the end of Chapter 9 focuses on establishing an operating budget. Review the information before reading the next section, which is a continuation of the case.
Performance Measurement Corporate headquarters generates the variance reports for each business unit. River Beverages has a sophisticated information system that automatically generates reports based on input that is downloaded daily from each plant. The reports can also be generated manually by managers in the organization. Most managers generate variance reports several times during the month, allowing them to solve problems before things get out of control.
Corporate reviews the variance reports, looking closely at over-budget variance problems.
Plant managers are questioned only about costs that exceed the budget. According to management, this ensures that the plant managers are staying on top of problem areas and keeping the plant operating as efficiently as possible. One week after the variance reports are generated, plant managers are required to submit a response outlining the causes of any variances and how they plan to prevent the problems in the future. If a plant manager has repeated problems, corporate may send a specialist to the plant to work with the plant manager to solve the problems.
1. Do you think the variance analysis process at River Beverages is effective?
2. What suggestions would you make to provide for a more efficient and effective variance analysis process at River Beverages?

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