Variance Analysis is the process of comparing actual financial or operational performance with predetermined standards to identify deviations known as variances.
Thank you for reading this post, don't forget to subscribe!- These variances are analyzed to determine their causes, assess their impact on business performance, and take corrective actions to improve efficiency and control costs.
- The difference between standard costs and actual costs is known as variances.
Favourable and Unfavourable Variances:
- If actual cost is less than the standard cost, the variance will be favourable.
- If actual cost is more than the standard cost, the variance will be unfavourable.
Types of Costs Variances:
- Material Variances
- Labour/wages Variances
- Overhead Variances