While what is done through variance analysis is just

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While what is done through variance analysis is just to quantify the difference between two figures - budgeted and actual ones. Some of the most common variances that are used in variance analysis are: Labor rate variance, Labor efficiency variance, selling price variance, purchase price variance and material yield variance . Concisely, when calculating the variance, if the budget amount is subtracted from the actual amount what indicates is whether it’s positive or negative variance. That Means, if it’s favorable or unfavorable. Question 8: A detailed Variance Analysis allows management to understand why fluctuations occur in a business and what it can do to change the situation and better meet targets In other Words, it’s an important type of prediction of business forecasting. It uses patterns of past business data to construct a theory about future performance. Variance data are placed into context that allows an analyst to identify factors such as holidays or seasonal changes as the root cause of positive or negative variances. Variance analysis is important to assist with managing budgets by controlling budgeted versus actual costs. In program and project management, for example, financial data are generally assessed at key intervals or milestones. For instance, a monthly closing report might provide quantitative data about expenses, revenue and remaining inventory levels.
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