3 Questions
What is the purpose of variance analysis?
Determining the cause of difference between baseline and actual performance
What aspects does variance analysis compare?
Baseline and actual performance
Which of the following is not a function of variance analysis?
Predicting future stock prices
Study Notes
Variance Analysis
- The purpose of variance analysis is to identify and explain the differences between actual and planned outcomes in a business or organization.
- Variance analysis compares actual results with standard or budgeted costs, revenues, and profits to identify areas of improvement.
- It compares aspects such as:
- Actual costs vs. standard costs
- Actual revenues vs. budgeted revenues
- Actual profits vs. planned profits
- One of the functions of variance analysis is not to make predictions or forecasts about future outcomes.
Test your knowledge of variance analysis with this quiz! Explore different techniques used to determine the causes and degrees of difference between baseline and actual performance. Challenge yourself and enhance your understanding of this important analytical tool.
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