Definitions for "Variance analysis"
is the analysis of performance by means of variances. Used to promote management action at the earliest possible stages. After a budget (based on standard costs) has been set, its usefulness lies in the review procedures which compare actual results against the budget. Variance analysis is the process of examining in detail each variance between actual and budgeted/expected/standard costs to determine the reasons why budgeted results were not met (material costs too high, sales prices too low, etc.). VAT see VALUE ADDED TAX.
The analysis of differences between standard costs and actual costs into their causes.
A variance is the difference between planned, budgeted or standard cost and actual cost (or revenues). Variance analysis is an analysis of the factors that have caused the difference between the predetermined standards and the actual results. Variances can be developed specifically related to the operations carried out in addition to those mentioned above.
The evaluation of performance by means of variances, whose timely reporting should maximise the opportunity for managerial action. These variances will be either favourable variances (F) or adverse variances (A).