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What is variance analysis?

  • Management Dictionary
  • Management Control

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Variance analysis allows for the precise identification of the origins of differences between what was budgeted and what was actually achieved, and for the measurement of the financial impact of each cause.
Thus, it is possible to calculate cost variances, revenue variances, and margin variances. For each element, sub-variances can also be calculated.

Variance analysis helps to identify the main sources of profit decline, including cost overruns and revenue decreases, and to measure their financial consequences. This facilitates corrective actions by prioritizing the most significant factors.

Moreover, this approach can be adapted to analyze the evolution of data between two periods.

Mots clés
  • Budgetary control, Budgets, Forecasts, Plans, Variances

Auteur.e(s)

TAHAR Caroline
Associate Professor
iaelyon School of Management

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