What is the significance of "uncontrollable variances" in performance evaluation?

• A. They show the manager has complete control.
• B. They are always due to poor performance.
• C. They should be ignored.
• D. They indicate the manager cannot influence them, so variances should be treated differently in evaluation and cause analysis.

Answer: (D)

Variance analysis looks at what a manager can influence versus what lies outside their control. Uncontrollable variances come from external factors such as sudden material price changes, currency swings, demand shifts, or regulatory impacts. Because the manager can’t influence these, it wouldn’t be fair to judge performance purely on them. In evaluating performance, these variances are treated differently: they’re acknowledged for their impact, but not used to assign responsibility; budgets or standard costs can be adjusted to reflect the uncontrollable factors, and the focus for action remains on variances the manager can control. This approach also guides cause analysis, separating what can be changed from what cannot, so attention and resources go to controllable issues.