Variance Analysis: Alternative Measures



Variance Analysis: Alternative Measures

Variance analysis

Variance analysis is the evaluation of difference between actual costs and standard cost allowed for a satisfactory output. The identification of deviation between planned and actual output can be used by managers to detect problem areas and take corrective action. It is used to analyze the performance by measuring deviations. The use of variance analysis is a key element in management by exception approach. It enables the managers to divert their attention to other issues if costs remain within the standards. Although managerial accounting need not follow accounting regulatory bodies, the use of ...