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    Variance in budget

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    What is the purpose of identifying variances in budgets? Does having a favorable variance always mean a positive situation? How about negative? Can you share two examples where a favorable variance could have a negative underlying affect.

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    What is the purpose of identifying variances in budgets? Does having a favorable variance always mean a positive situation? How about negative? Can you share two examples where a favorable variance could have a negative underlying affect?
    The purposes of variance analysis are:
    1. Variance analysis is the element of management by exception. i.e., the management has to concentrate on those parts which are not working as per the ...

    Solution Summary

    This solution explains why it is necessary to identify variances in budgets, and outlines why positive variances are not always good and negative variances are not always bad; it provides two examples to illustrate these points.

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