Variance Analysis
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Variance Analysis. Discuss and illustrate analysis using data that you create. What type of meaningful conclusion can emerge from variance analysis? Explain.
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Solution Summary
The process by which the total difference between standard and actual cost analyzed is known as variance analysis.
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According to Abeysinghe (n. d.) a variance is the variation between planned, budgeted, or standard cost and actual cost. The process by which the total difference between standard and actual cost analyzed is known as variance analysis. Variance can be divided into 3 groups as follows (Abeysinghe, n.d.):
1. Variable cost variances
2. Sales variances and
3. Fixed production overhead variances
The direct material total variance which is the difference between the cost of the actual output and what it should have cost can be divided into 2 sub-variances (i.e.) the direct material price variance (the ...
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