This variance analysis template guides you through the process of variance analysis using the column method.
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Variance analysis can be summarized as an analysis of the difference between planned and actual numbers. The sum of all variances gives information on the over-applied or under-applied values for the company’s reporting period. For each individual variance, companies often like to determine its favorability by comparing actual costs and standard costs and applying logic.
When standards are compared to actual performance numbers, the difference is what we call a “variance.” Variances are computed for both the price and quantity of materials, labor and variable overhead, and reported to management. However, not all variances are important. Management should only pay attention to those that are unusual or particularly significant. Often, by analyzing these variances, companies use the information to put the blame on someone so he/she takes responsibility for his/her actions. The role of variance analysis, however, is more about searching for the problem so that it can be fixed and to improve overall company performance.
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